I am entering repayment in a couple of months for a substantial amount from graduate education. I am eligible for IDR options, including Pay as you earn.

My question is regarding the interest that has been accruing while I was in school. My understanding is that the interest accrued for subsidized loans will capitalize on when I enter into repayment. With Pay As You Earn, however, it seems that interest only capitalizes when you no longer have evidence of financial hardship with a cap of 10% that capitalizes when you don’t qualify for PFH.

Does this PAYE condition also apply to the interest accrued prior to entering repayment? If I elect for PAYE, will the interest from before not capitalize?

Thank you.