When student debt payments restart, understanding the difference between subsidized and unsubsidized loans becomes crucial.
Here are the important takeaways:
*Student loan payments and interest accrual resumes in October and September, respectively.
*Subsidized loans don't accrue interest while in school or during deferment, while the U.S. Department of Education pays the interest in these cases.
*Unsubsidized loans accrue interest immediately, making them more expensive.
*Unpaid interest on unsubsidized loans may "capitalize," increasing future interest payments.
*Pursuing deferment or forbearance may not be the best option, as interest typically continues to accrue.
*Income-driven repayment plans are generally better for borrowers unless the financial difficulty is short-term.
The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual.