To pay for college, you have just taken out a $1,000 government loan that makes you pay

Question:

To pay for college, you have just taken out a $1,000 government loan that makes you pay $126 per year for 25 years. However, you don’t have to start making these payments until you graduate from college two years from now. Why is the yield to necessarily less than 12%, the yield to on a normal $1,000 fixed-payment loan in which you pay $126 per year for 25 years?

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...