Should I Pay Off Principal or Interest (or return 3L $) with my SA income? Forum

[Br3v]

I am a current 3L and I want to pay off some of my debt with my income from the summer. Does it matter whether I pay off accrued interest or principal? I am a 3L so the interest hasn't capitalized yet but I don't see why that would matter. Or should I just return some of the loans I took out for 3L and live off of the summer income I saved?

Talking in the range of paying off $15 - 20k

[jkpolk]

I am a current 3L and I want to pay off some of my debt with my income from the summer. Does it matter whether I pay off accrued interest or principal? I am a 3L so the interest hasn't capitalized yet but I don't see why that would matter. Or should I just return some of the loans I took out for 3L and live off of the summer income I saved?

Talking in the range of paying off $15 - 20k

If you're able to pay off principle you should do that but my government loans force me to pay off interest first

[orangecup]

If you pay back loans within 120 days of disbursement, I believe the amount is automatically applied to principal.

The Fed loan servicing site says: "Any interest or fees that have accrued on your loans will be paid first before reducing your principal balance." I called in once, and I think they told me you can call post-payment and ask them to apply your loans in a particular way. Go ahead and call to confirm though.

I ended up taking out fewer loans 3L year with the SA income.

[Trout et al]

This might be a relevant consideration: http://www.irs.gov/taxtopics/tc456.html