True or False: Interest does not accrue on subsidized loans during periods of forbearance.

Interest on subsidized loans does not accrue during periods of forbearance, which is why indicating "true" would imply that borrowers can pause their payments without facing additional interest. However, these loans have a grace period during which the government covers the interest. When a borrower enters forbearance after this period or is already in repayment status, interest does begin to accrue.

In essence, subsidized loans are designed to benefit borrowers by relieving them of the financial burden of interest while they are in school or during certain deferments. It is only during forbearance, which serves as a temporary suspension of payments, that the government does not cover interest accrual, leading to the understanding that it indeed does occur. Therefore, the statement is false since interest will accrue at that point.