Which Student Loan Has No Interest

Interest is charged on the principal balance, meaning the initial amount you owe for the loan. While it’s not as common as a traditional loan, a no-interest student loan is an intriguing option, since it will never accrue interest.

No-interest loans might help you get out of debt faster. On a standard 10-year federal student loan repayment plan, with $30,000 in debt and a 5% interest rate, you would end up paying more than $8,000 in interest alone. Federal student loans accrue interest daily.

Federal Direct Subsidized Loans, which are awarded to lower-income students who complete the FAFSA, are technically interest-free, but throughout your repayment. The government covers — or subsidizes — the interest on these loans only while you’re enrolled at least half-time, enjoying your grace period or in certain periods of deferment.

No, a subsidized student loan isn’t an interest-free student loan Federal Direct Subsidized Loans, which are awarded to lower-income students who complete the FAFSA, are technically interest-free, but throughout your repayment.