Deferred Interest

Payments on student loans can be deferred until certain periods after enrolment or graduation. This means that the student does not have to pay back the principal and interest on the loan while still attending college. This can give the student a chance to gain employment and settle into a job before beginning repayments. The repayments then include the interest incurred during the deferment period. Deferred interest is generally capitalized quarterly and at the time the loan enters repayment. Deferred interest can also mean interest that is not required to be paid until a certain period of time has lapsed. Students can have the option to repay the principal and defer the payments of the interest until a later date.

Students attending medical school can even request additional deferments after graduation while they are completing an internship or residency. Interest payments can then be paid after the second deferment period has ended when the student can comfortably afford the repayments. However, deferment should not exceed a maximum of eight years after the original agreed term. Sometimes students can request a deferment due to certain cases of hardship or if they have suddenly lost their job or if they are unable to find full-time employment. This type of deferment can last roughly three years.

More Terms Explained here