A worked example
A $30,000 unsubsidized loan at 5.5% with a 6-month grace period accrues about $835 in interest before repayment even starts, pushing the balance to roughly $30,835. Over a 10-year repayment term, that comes to about $335 a month.
Frequently asked questions
What's the difference between subsidized and unsubsidized loans here?
Subsidized federal loans don't accrue interest while you're in school or during the grace period — the government covers it. Unsubsidized federal loans and virtually all private loans accrue interest the whole time, even before you start paying.
What does 'capitalized interest' mean?
When interest that accrued during deferment or grace is added to your principal balance once repayment begins, you then pay interest on that larger amount going forward — interest charged on what was previously just interest.
Is a longer grace period always better?
Only if interest isn't accruing during it. If it is, a longer grace period just means more capitalized interest added to your balance before you've made a single payment.
This calculator provides estimates for general informational purposes only and is not financial advice. Federal loan terms and programs change — confirm details at studentaid.gov.