Not Paying Student Loans while In School?

[Anonymous]

Hello,

The other week, I told my mother I am looking for a job this summer so I can pay off a little bit of my student loans. I am a rising college sophomore, and I only took out $5500 in loans and will not be taking any more because I won't be needing loans next year or the year after. My mother was really concerned and insisted that I do not start paying until I get out of college. Any idea why she said that?

[SCF]

You aren't required to pay on your student loans while they are under an "in-school deferment" which lasts until you go under half-time enrollment.  If you took out a federal loan, then the interest may also be paid on the loan while you are in school.  I would reccomend going down to your financial aid office and having them help you figure out what type of loan you have, if the interest on it is currently being paid, and they can probably also give you the contact information for the servicer so you could set up an account online to make payments if you decide to do that.

If the loan is subsidized, I would hold on to the money - an emergency fund is a nice thing to have, and if you make it through the rest of school without spending it, you can apply it to the loan after you graduate and get settled in a job.  If the loan is accruing interest, making payments now may save you some money in the long-term, just balance your desire to save money on interest with your need to be able to cover unexpected expenses during the school year when you may not be able to work as much.

[Anonymous]

---

@SCF wrote:

You aren't required to pay on your student loans while they are under an "in-school deferment" which lasts until you go under half-time enrollment.  If you took out a federal loan, then the interest may also be paid on the loan while you are in school.  I would reccomend going down to your financial aid office and having them help you figure out what type of loan you have, if the interest on it is currently being paid, and they can probably also give you the contact information for the servicer so you could set up an account online to make payments if you decide to do that.

If the loan is subsidized, I would hold on to the money - an emergency fund is a nice thing to have, and if you make it through the rest of school without spending it, you can apply it to the loan after you graduate and get settled in a job.  If the loan is accruing interest, making payments now may save you some money in the long-term, just balance your desire to save money on interest with your need to be able to cover unexpected expenses during the school year when you may not be able to work as much.

---

I think $3000 is subsidized, and $2500 is unsubsidized, or maybe it's the other way around. I know I don't have to pay unless I enroll half time, and I don't have to pay until I graduate/six months after graduation... But what makes her feel that it is urgent I do not pay it at all for now?

[SCF]

There is no rule that prohibits early payments, or penalties for paying early, so I don't know.  Maybe she wants you to have the money available for other expenses, or maybe she has some other reasoning.  Why don't you sit down with her and discuss this?  If she has some misinformation about how paying back loans works, you could correct that and then work together to find a plan.

[martinsoka17]

I was actually glad I paid on the interest my loans were accruing while I was at school. Two of my loans (totaling almost $8k) have a 6.8% interest rate. I worked while I went to school, so I was able to toss a little extra money at them, and also when I filed taxes I could report that I paid SL interest. All I did was go down to my financial aid office and talk to them about how to pay on the interest. And assure your mom that it's not a lot of money you'll be paying.