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About student loans,

while in deferment, is it better to pay the interest for the unsubsidized loan? Does it matter, save any money?

Answer Question
 
Raine2001

Asked by Raine2001 at 6:23 PM on Jan. 13, 2010 in Money & Work

Level 25 (24,018 Credits)
Answers (3)
  • On an unsubsidized loan it is def. better to pay the interest if you can. If the loan was subsidized the amount would be so small it wouldn't make much difference over a few months.
    GrnEyedGrandma

    Answer by GrnEyedGrandma at 6:36 PM on Jan. 13, 2010

  • How do I figure out the interest payments? Do I need to just call the loan company?
    Raine2001

    Answer by Raine2001 at 6:39 PM on Jan. 13, 2010

  • They should be sending you a statement every few months (maybe every three) telling you how much has accrued in interest. If not you can ask them too.

    I know for us, we just pay online so if you can find their website and set up an account you can see how much interest has accrued and paid it.

    Why would you want to pay it? Because if you don't, then next month they start charging you interest on the interest. So say you accrued $50 this month. Well next month you'll be charged interest on the loan PLUS interest on the $50. And then the next month you'll be charged even more. It's insane the way that stuff really adds up.

    The process is called compounding interest- and it works well if it is working for you. ie.) If you are saving for retirement and letting your interest earn interest. BUT when it works against you it gets pricey very quickly.

    Sorry this is long...
    GOOD LUCK :)
    Anonymous

    Answer by Anonymous at 6:54 PM on Jan. 13, 2010

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