Why not just borrow less this year and have a lower principal?
The interest, not the full loan amount.
E.g., a person might be able to pay 4k and not 30k for tuition. And, with that 4k, they want to pay off the 2k in gained interest payments before they start accruing interest on a 32k chunk of money.
wolfpack86@lemmy.world 1 day ago
qarbone@lemmy.world 1 day ago
Ah, I see. I misunderstood their position. Yes, you should ask for a smaller principal loan, instead of just paying down the interest of a larger loan.
A smaller principal is always best, but sometimes that is best served by paying down interest.
ZoteTheMighty@lemmy.zip 1 day ago
So by those numbers, if you will owe another 30k next year, and this time you have 6k to pay, you should put your 6k fully towards the 30k of new loan, and nothing towards the 26k you owe in loans. That’s why they lock you out from paying the loan, they’re forcing you to make the mathematically optimal choice, unless you happened. To be on the verge of paying 100% of your tuition each year.
qarbone@lemmy.world 1 day ago
I’ll agree that ensuring you borrow the least possible is best (I misunderstood what they were saying in the previous comment).
But I do not believe loan offices were thinking about public service when they made the decision to prevent paying off interest. If they were, they probably wouldn’t be accruing interest while you’re still in actively enrolled.
freely1333@reddthat.com 22 hours ago
I thought the official ones didn’t accrue interest while you were enrolled no?
qarbone@lemmy.world 22 hours ago
Generally, the federal ones don’t. But there are other types of loans, like the ones in the main post.