On many student loans, education loan interest calculator including many federal loans, any interest that accumulates during school and deferment is capitalized and added to the original balance of the loan.

2. Take 4 Steps to Understand Student Loan
Interest Rates

3.  Megan Murray graduated from the University of Central Oklahoma in 2005 with a
relatively reasonable $13,000 in undergraduate loan debt.
 But after spending several years teaching in China – and deferring her loan
payments – she came home to find that her high-interest private loans had swelled
to around $30,000.
 "I didn't know that the second I'd cashed that check, interest started accruing," says
Murray.
 Murray buckled down, moved back in with her parents and managed to pay off her
debt within several years.
 And while her experience is extreme, the fact is that interest is a major – and often
overlooked – cost of borrowing student loans.
 Even ignoring interest while in school can cause it to escalate, says Scott Morrison,
director of financial aid at Bridgewater College in Virginia.

4. Learn the interest on federal loans
 Interest on federal student loans varies depending on several factors, including the
type of loan, year it was borrowed and whether the borrower is an undergraduate or
graduate student.
 year, subsidized loans, which have interest covered in school, and unsubsidized
loans, which don't, carried a 4.66 percent interest rate.
 For graduate students in 2014-2015, unsubsidized loans carried a 6.21 percent rate
– higher than the rate for undergraduates. PLUS loans, available to graduate
students and parents for up to the full cost of attendance minus any other aid,
charged 7.21 percent.
 Those rates are fixed over the life of the loan, meaning that once they're disbursed,
they won't change. But the 2015-2016 school year will bring fresh market-based
rates for new loans.

5. Investigate interest on private loans
 Credit scores matter in the private loan industry, so families with strong
financial histories can expect better rates while those with less-than-stellar
credit reports may need to borrow at a higher rate or find a consigner.
 Interest may also depend on the repayment terms, whether the student
signs up for automatic debits – which also net borrowers an interest rate
reduction on federal loans – and other factors.
 Students often have the option between a variable-rate loan, which adjusts
at regular intervals with the market, and a fixed-rate loan.
 While variable rates are lower right now, borrowers should be
cautious when committing to one since they can rise over the life of
the loan.

6. Beware of capitalization
 On many student loans, education loan interest calculator
including many federal loans, any interest that accumulates
during school and deferment is capitalized and added to the
original balance of the loan. This can create a snowball effect,
causing the amount owed to increase, with students paying
interest on interest, and repaying more debt.
 Students can tamp down that interest – and prevent it from
capitalizing – by making interest-only payments while in school.
 Being mindful of what they've borrowed and using a repayment
calculator will also help students avoid sticker shock after
graduation, says Joe DePaul, CEO and co-founder of College
Ave Student Loans, a private student loan provider.

7. Compare more than just interest
 Interest isn't the only factor to compare when weighing the costs of
various loans, say experts.
 "It's important to look at all the features of a loan, not just the interest
rate," says Yoia, of Quinnipiac University.
 Look at repayment options, including forbearance or deferment, death
or disability discharges and options for forgiveness or income-based
repayment. Federal loans offer better protections than private loans in
many cases.
 And remember, says DePaul, that, in addition to interest, the overall
cost of a loan also depends on whether the student tackled it in school
and how much time it takes to repay it.

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Source : http://www.usnews.com/education/best-colleges/paying-for-
college/articles/2015/03/25/take-4-steps-to-understand-student-loan-interest-
rates?page=2