I do. You can make extra payments on SAVE without losing your interest subsidy.

However, in most cases, I think the best approach for most borrowers will be to pay the minimum.

Any update on on this? Thank you!

I’m of the opinion that there isn’t necessarily one best strategy in this situation. For example, if you have credit card debt, that should get paid off first. I’d also encouarge you to consider building up an emergency fund before paying down a zero interest loan.

I put my thoughts on this exact issue in more detail in this article.

Yes. An ffel loan. I meant a private college. Thank you for the advice.

What would you suggest for the best strategy to pay off my loans if not paying while I have zero interest?

You can make payments while qualified for $0 payments and it will get applied to the principal. However, this usually isn’t the best strategy.

On your second question, do you mean you consolidated privately-held FFEL loans into a federal direct loan? (I ask because it really isn’t possible to consolidate a traditional private loan into a federal loan)

Borrowers with FFEL loans who consolidate before 4/30/24 should get full credit for their payments made prior to consolidation.

Second question. I recently consolidated my private school student loans to a federal loan to be able to take advantage of the SAVE program. Does that mean that my years under the FFEL no longer count toward the 25 years of forgiveness?

I suppose I’m just concerned Mohela has it screwed up lol. As long as it’s flowing correctly I don’t really care about the process. It’ll probably be some giant batch cycle they run monthly. I’ve seen on Reddit where people say, “it’ll be removed a few days after payment is made,” then I’ve seen others say, “at the end of every month.”
All I know is I haven’t seen anything happen nor any news of how it will happen. And I can’t stomach sitting on the phone for two hours with Mohela only to have someone say, “uh, jeez, I don’t know.” If you ever find the answer Michael please let us know. Thank you for all you do!

That is a really good question, Tim.

Do you have a particular preference in how it gets applied, or are you worried that they are forgetting to do it? If it is the latter, it is probably safe to give it a month or so for them to iron things out. I could see them doing subsidy adjustments for all borrowers on the same day each month, or as part of the monthly billing cycle.

The daily interest component I’m seeing is just the balance going up and up daily. It’s nothing labeled “daily interest.” It’s just a higher total every day. It’s a shame no one knows exactly where and how the subsidy will appear, whether online, on the bill, on another statement… I’ve scoured the internet for days and really see absolutely nothing concerning how it’s applied practically.

You are correct that your balance should not grow as long as you are on SAVE making $0 payments. From an accounting perspective, I’m not sure how they are handling it. I could see them adding the daily interest each day and then adding a subsidy credit at the end of the month to cancel out the interest. I can also see them just not adding interest at all.

I also have Mohela, but if I log into my account, I’m not seeing the daily interest compenent you are describing. Where are you seeing this info?

Finally, we can’t necessarily assume that Mohela isn’t making a mistake. There are many servicer issues happening right now.