Comments on: SAVE Repayment Strategy: Extra Payments are a Mistake if you get the Interest Subsidy https://studentloansherpa.com/save-repayment-strategy-subsidy/ Expert Guidance From Personal Experience Sat, 22 Jun 2024 15:31:25 +0000 hourly 1 https://wordpress.org/?v=6.7.1 By: Michael P. Lux, Esq. https://studentloansherpa.com/save-repayment-strategy-subsidy/comment-page-1/#comment-14441 Mon, 29 Apr 2024 20:21:29 +0000 https://studentloansherpa.com/?p=17751#comment-14441 In reply to Ben W.

It should be applied entirely to principal (though you will want to make sure your servicer applies the payment correctly). That said, I’ve not really seen many cases where it makes sense to pay extra when you are receiving the subsidy. You can always just put that extra payment in a high yield savings account. Then you earn some interest with the money and when it is large enought to pay off the loan, or you no longer qualify for a subsidy, you can make a large payment.

]]> By: Ben W https://studentloansherpa.com/save-repayment-strategy-subsidy/comment-page-1/#comment-14440 Mon, 29 Apr 2024 03:30:34 +0000 https://studentloansherpa.com/?p=17751#comment-14440 So if, for example, my required payment on SAVE is $0, but my loan balance generates $300 in interest each month. Let’s say I decide to make a $500 payment outside of the regular payment schedule. Would the $500 go directly to the principal balance? Or would the first $300 go towards the interest until the accrued interest was entirely paid, before anything goes towards the principal?

]]>