It is always best to borrow only what you need to pay the school. It is in your best interest to avoid over borrowing. The less you borrow, the less you need to repay. If your school offers the AMS Interest-Free Monthly Payment Plan, take advantage of this opportunity to budget before you borrow and save on costly interest. Capitalization is the process by which accrued interest on Unsubsidized Stafford Loans is added to the outstanding principal of the loan.
Frequent capitalization increases the dollar amount the borrower has to repay.
AMS capitalizes at the end of deferment because it saves the borrower money. Repayment of Stafford Loans begins six months after the student graduates or withdraws from school. Repayment of PLUS Loans begins within 60 days after the final disbursement of the loan. If a student drops out of school and the loan check is sent to the school afterwards, the school will return the loan proceeds to the lender, and the disbursement will be canceled. It is best to consolidate loans after the grace period ends because there is no grace period for consolidation loans.