Understanding Interest

When you borrow student loans, you are required to pay the loans back with interest - interest is the cost of borrowing your student loan. Federal Direct Unsubsidized Loans accrue interest as soon as you receive loan funds. If possible, you should make interest payments on an unsubsidized loan while you are in school.

Here’s how it works…

A dependent freshman student is eligible to borrow up to fifty-five hundred dollars in unsubsidized loan funds. While you are in school for four years, this loan will accumulate approximately one thousand one hundred dollars in interest. It will cost an additional one thousand eight hundred dollars in interest during your ten-year repayment period. This means you will repay eight thousand four hundred dollars for the fifty-five hundred dollar loan you borrowed.


Remember, interest begins to accrue as soon as an unsubsidized loan is disbursed. While you are not required to pay interest while attending school at least half-time or during your grace period, however not making an interest payment increases your cost of borrowing. The ASLA Loan Repayment Calculator can be used to show you the approximate amount of interest on your loan balance.

*Amounts used are estimated for this demonstration. Interest rates change annually. The maximum a dependent freshman can borrow is $5,500 for an academic year.

Answer Question

Question: Interest

TRUE or FALSE – If I receive a Federal Direct Unsubsidized loan, I should not make interest payments while in school.

  • True
  • *False
Submit Answer

You should try to make interest payments while you are in school. Unpaid interest will increase the total amount you will repay. Check out the Student Loan Repayment Calculator at ASLA.info.

Start a new session

Oops, there was an error with your current session. Let's try this again!

Continue with this session

This will erase  ’s session and start the quiz at the beginning.

Continue with this session
Start a new session

Oops, there was an error with your current session. Let's try this again!