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Interest is additional money that you pay to a lender as a cost of borrowing money. Interest is calculated as a percentage of the unpaid principal amount that you borrowed.

Direct Loans are “daily interest” loans. On daily interest loans, interest accrues (adds up) every day.

If your loans are subsidized, you are not responsible for paying the interest that accrues while you’re in school. If your loans are unsubsidized, you’re responsible for all the interest that accrues, even while you’re in school. Learn about the��.

It’s your responsibility to pay any interest that accrues (adds up) on your loan(s). And, in some cases, unpaid interest can capitalize (be added to your principal balance).

On a traditional repayment plan (Standard, Graduated, or Extended), your monthly loan payment covers all the interest that accrues between monthly payments. So no additional unpaid interest will accrue while you're making payments on one of these plans.

But unpaid interest can add up in some situations, such as if you’re on an income-driven repayment (IDR) plan or if you’re not making payments.

When does unpaid interest accrue (add up)?

On Income-Driven Repayment (IDR) Plans

Unpaid interest��may��accrue if you’re repaying your loans under an IDR plan. Under an IDR plan, your monthly loan payment can sometimes be less than the amount of interest that accrues between your payments. In this case, your payment won’t cover all of your interest, so an amount of unpaid interest will add up each month. This unpaid interest will still be your responsibility to pay until your loan is forgiven (or paid in full).

During Forbearance

You don’t have to make monthly payments during periods of forbearance. But interest continues to accrue during periods of forbearance.

During Deferment for Unsubsidized Loans

You don’t have to make monthly payments during periods of deferment. But if you have an unsubsidized loan, interest continues to accrue during periods of deferment.

During School and Grace Periods for Unsubsidized Loans

You’re not required to make monthly payments while you’re in school at least half-time or during your grace period. But if you have an unsubsidized loan, interest continues to accrue while you're in school and during the grace period.

What happens when interest capitalizes?

When your unpaid interest capitalizes, it increases the outstanding principal amount due on your loan. Then your interest is recalculated based on that higher principal balance, increasing the overall cost of your loan. And depending on your repayment plan, capitalization may also cause your monthly payment amount to increase.

When does unpaid interest capitalize?

Unpaid interest on��Direct Loans and Federal Family Education Loan (FFEL) Program loans managed by the U.S. Department of Education (ED)��capitalizes

• after a deferment on an unsubsidized loan; or
• if you are repaying your loans under the income-based repayment (IBR) plan and no longer qualify to make payments based on income or leave the IBR plan.

Unpaid interest on��FFEL Program loans not managed by ED��may capitalize

• after a deferment on an unsubsidized loan;
• after a forbearance on any type of loan;
• after the grace period on an unsubsidized loan; or
• if you are repaying your loans under the income-based repayment (IBR) plan and no longer qualify to make payments based on income or leave the IBR plan.

Example of What Happens When Interest Capitalizes

Say you have a $10,000 Direct Unsubsidized Loan with a 6.8% interest rate. On this loan, the amount of interest that accrues (adds up) each day is $1.86 (find out��).

In this example, you’re in a deferment for six months. During the deferment, you do not pay off the interest as it accrues. In this case, the loan will accrue $340 of unpaid interest. At the end of the deferment, the accrued interest of $340 will capitalize (be added to your principal balance).

You’ll then be charged interest on the higher principal balance of $10,340. Based on this increased principal balance, the amount of interest that accrues each day will also increase (to $1.93 per day). This will result in you paying more over the course of repaying your loan balance.

No payment you make will go toward any of your loan principal until you’ve paid all your unpaid interest.

Follow these steps to see how much of your payment will go toward your principal balance.

1. Use the����explained above to determine how much interest has accrued (added up) since your last payment.
2. Subtract the amount of accrued interest from your monthly payment and any other outstanding interest.
3. See the number that’s left. This number is how much of your payment will be applied to your outstanding principal balance. This amount may continue to be $0 until all outstanding interest has been paid.

Example of Paying Interest and Principal

Say you have a $10,000 Direct Unsubsidized Loan with a 6.8% interest rate. The amount of interest that accrues (adds up) per day is $1.86.

Let’s assume you’re repaying your loan under the��. In this repayment plan, your monthly payment would be $115.

It has been 30 days since your last payment, and there was no other interest outstanding when you made your last payment. In this case, $55.80 in interest will have accrued.

Subtracting this amount from $115 results in a total of $59.20. So $59.20 would be applied to your outstanding principal balance of $10,000.

Under any income-driven repayment plan, your monthly payment amount may sometimes be less than the amount of interest that accrues on your loans. This is called negative amortization.

Learn��.

��if you have more questions about how your payment is applied to your principal balance.

Eligibility Requirements

• Students must be in good academic standing, as spelled out under 188bet������ַ's Financial Aid Satisfactory Academic Progress Guidelines.
• Students must not be in default for any other federal students loans.
• New borrowers must complete the Entrance Loan Counseling and a Master Promissory Note.
• An Exit Counseling��session must be completed when enrollment drops to below half-time enrollment or enrollment has been terminated.

Loan Application - Dates of Availability and Disbursement Info

Fall 2024

Spring 2025

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Deadlines for Loan Application Submission

Fall 2024

Spring 2025

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For disbursement information, please read the Loan Disbursement Policy & Regulations below.

Students Rights

You have the right to ask a school

• What it costs to attend and about the refund policies for students who drop out.
• How the school determines whether students are maintaining satisfactory academic progress and what happens if they are not.
• What financial assistance is available, including all federal, state and school financial aid programs.
• What the deadline is for submitting each aid application and about the criteria used to select recipients.
• How each student's financial need is determined, including how costs for tuition and fees, room and board, transportation, books and supplies, and personal and miscellaneous expenses are considered in your budget.
• What resources-such as parental contribution, other financial aid, personal assets, etc.-are included in the need calculation, and how much of your financial need, determined by the school, has been met.
• To explain the various programs in your student aid package. If you believe you have been treated unfairly, you may request reconsideration.
• What portion of the financial aid must be repaid and what portion is grant aid.
• What is the interest rate, the total amount to be repaid, repayment procedures, the length of time to repay the loan, and the date when repayment begins.
• How to apply for additional aid if your financial circumstances change.
• Within certain timeframes, you may cancel a loan or request a lower amount through your My188bet������ַ portal before accepting your loan(s). Once your loan(s) have been accepted, you will��need to work with your lender/servicer to return funds.

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Students Responsibilities

It is your responsibility to

• Review all information about a school's program before enrolling.
• Pay special attention to your application for student financial aid, complete it accurately, and submit it on time to the right place. Errors can delay financial aid. Intentional misreporting of information on application forms for financial aid is a criminal offense subject to penalties. Aid awarded due to inaccurate information will have to be repaid.
• Submit all paperwork by the deadline.
• Submit all paperwork to the right place.
• Respond promptly and return all additional documentation, verification, corrections, and/or new information requested by the financial aid office or the agency to which you submitted applications.
• Read, understand, and keep copies of all forms that you sign.
• Notify the lender within 10 days of changes in your name, permanent mailing address, and school status.
• Repay the loan according to the repayment schedule. Payment is required even if you do not get a bill.
• Do not wait for the lender to contact you; write and request a repayment schedule.
• If you cannot make a payment or think no payment is due, contact your lender and request a deferment of repayment, forbearance, hardship extension, or in-school extension.
• Understand the school's refund procedures.

San Joaquin 188bet������ַ College’s Cohort Default Rate (CDR) is 0% and the National Default Rate is 2.3%. ��Approximately 3% of our student population borrow student loans.