Continue paying interest on undergrad loans? Forum

[Humbert Humbert]

I will be attending law school in the fall and my undergrad loans will be put into deferment. I have a handful of small fed loans, with interest rates ranging from 3.15 to 6.55. My parents are willing to contribute $500 or so per month to help out. The question is: should this money go towards making interest-only monthly payments on my undergrad loans while they are in deferment? Or should it go towards my COL currently, which would reduce the amount of law school loans I would need to take out by 5-6k per year? FWIW, if I put it towards my COL, I would need about 60k in loans/year (not counting any SA $).

[rdelaney]

I will be attending law school in the fall and my undergrad loans will be put into deferment. I have a handful of small fed loans, with interest rates ranging from 3.15 to 6.55. My parents are willing to contribute $500 or so per month to help out. The question is: should this money go towards making interest-only monthly payments on my undergrad loans while they are in deferment? Or should it go towards my COL currently, which would reduce the amount of law school loans I would need to take out by 5-6k per year? FWIW, if I put it towards my COL, I would need about 60k in loans/year (not counting any SA $).

I'm no finance expert...take that in mind. However, I've dealt extensively with learning just about all I can on the loans I have taken out from undergraduate as well as the loans I will be taking out in law school. My friend also works in collections at Sallie Mae and I've been picking her brain on advice and information about student loans.

With that said...the $500 your parents are offering you would do more justice in lowering you COL to minimize your grad school debt. Undergraduate loans are a mix of subsidized and unsubsidized with (more or less) lower interest rates than the grad school counterparts. Also worth noting, if you were to use that money to pay off some of the undergraduate debt...don't use it as interest-only payments. Contact your loan servicer and see if you can use that money to pay off the principal...the lower that is, the lower the interest. You should focus on minimizing the interest accrued in law school, as well as the amount of loans you'll continue to take out. So pick your poison and choose that option. (Your loan servicer might not make it easy for you to pay off the principal before the interest, if that is the case, definitely use the money to minimize law school debt.)