New proposed rule could transform student loan interest ...Middle East

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New proposed rule could transform student loan interest
Story at a glance The Education Department has proposed eliminating certain instances of interest capitalization on federally held student loans.  It’s a lesser-known mechanism in which interest accrues and is added to a loan’s principal balance, compounding how much a borrower ends up paying over the life of the loan.  Currently, unpaid interest accrues annually during any period of negative amortization — which is when a borrower isn’t making payments high enough to cover accrued interest or the principal balance. A new rule proposed by the Education Department could transform the way student loan interest is capitalized, possibly saving borrowers thousands.

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