How Student Loan Interest Works for Dummies

Six months after graduation, a portion of my hard-earned dollars as a teacher started going to student loan payments. I found myself asking this question, how does student loan interest work?

Understanding Student Loan Interest 101

Interest can obviously work against or for you, but when it comes to student loan interest it is against you.

How is student loan interest calculated?

Student loans have two types of interest: 1. Subsidized – meaning the interest starts to accrue after graduation.

How is student loan interest calculated?

2. Unsubsidized – meaning the interest starts to accrue as soon as the loan is taken out.

Daily Compounding Student Loan Interest

The interest rate is divided by 365 days and then that number is charged daily based on the remaining principal balance.

How to minimize student loan interest

The quickest way to minimize student loan interest is to pay the principal balance quicker. While refinancing student loans to get a better interest rate.

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