So if I take out any Federal Subsidized Loans for College, can I begin to repay them as soon as I take them out, to avoid to interest, or is that not an option? Like is the only time to pay back these loans during the repayment period that starts after my Undergrad years end?
Subsidized loans don’t accrue interest for you while you are in college.
That is what subsidized means.
But yes, you can pay loans back at any time.
@thumper1 I called the Department of Education last week trying to figure out when i choose my repayment plan and where to indicate whether I want to pay interest (for the unsubsidized loan) in school, only to be told that repayment plans are chosen after graduation?!?
I’m calling again tomorrow because the answer I got made no sense.
Repayment PLANS are chosen when you graduate. BUT that doesn’t preclude you from paying your loans off sooner than that.
This poster is asking about paying SUBSIDIZED loans to save on interest. The government subsidizes the interest while students who receive subsidized loans are in college. This kid won’t have any interest until he graduates on subsidized loans.
You aren’t going to avoid interest, and in fact what you’d be paying will most likely be the interest.
- As @thumper1 said, subsidized loans have the interest paid by the government as it accrues. It doesn't make sense to pay back the principal while you are in school. If you have that extra money, just borrow less.
- You get the money through the school, but you pay back a government loan through a loan servicer. Shortly after you take out the first loan, you'll receive info on the servicer. You'd have to contact them to make payments. You CAN make any payments you want at any time. If you do that, make sure you keep good records
You can also repay your subsidized loans in full during your 6-month grace period (which you get after you graduate, leave school or drop below half time) - no interest during the grace period.
What I do for my kids is every 3 months I go on the servicer website and I see how much interest has accrued and I pay it. This way when they graduate they are just paying off principle. Its really not a lot every 3 months.
This student has subsidized loans according to the first post.
There won’t BE any interest but he can repay the principal.
You avoid the compounding. On an unsub loan.
@Nurse001
And the interest that accrues starting at 6 months post-graduation.
@brantly Yes I meant principle and interest after graduation 
Student loans are simple interest, so not compounding while you are a student. When you convert from a student to a payer, any accrued interest is added to the principal once, but that’s the only time there is compounding. So it really doesn’t matter if you pay the $20/mo interest as it accrues or $500 at graduation in a lump sum, the amount of interest will be the same.
My daughter has some subsidized loans that will go into repayment status this fall. I’m not encouraging her to pay them off early. She can get more bang for her buck by fully funding her 401k and just paying her monthly loan payment for 6-10 years. Same with her car payment. At 2.99%, makes little sense to pay it off. I’m sure at some point she’ll get sick of making the payments and just pay it off, but really it is not the smart financial move. I think by the time she buys a house the rates will be higher than her car loan or student loan rates.