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    Loan repayment question

    I have federal student loan which as of today has a balance of $34,631.55. It is broken up into a subsidized $8,367.06 and unsubsidized $26,264.49.

    This month I will have $4,500 to put on the loans and can break it up between subsidized and unsubsidized. Is there any advantage to putting it all on either one?

    Interest rate is 5.125% on both.

    I am trying save all the interest I can.

    My calculations say putting it on either one would save the same amount of interest or am I calculating it wrong?

    Thanks for your help everyone.

    #2
    If both are out of deferment, and you don't plan on going back to school, it doesn't matter exactly but considerations include...

    If you go back to school, you can get the subsidized one into deferment and the government will pay the interest again - not so with the unsubsidized. In this case, pay the higher balance, unsubsidized one first.

    If you are looking at it from an interest point of view ONLY, then the higher balance, obviously, costs more in interest.

    Personally, I'd pay the lower balance first though, to get it out of the way, since you have about half of it, and depending on your situation, you could maybe pay the other half this year.

    Hope that helps a bit!

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      #3
      Which one should I pay first to save the most interest?

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        #4
        Originally posted by skives View Post
        Which one should I pay first to save the most interest?
        Doesn't really matter. With the same interest rate, in terms of saving interest, just think of them as one big loan rather than two.

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          #5
          Originally posted by siggy_freud View Post
          Doesn't really matter. With the same interest rate, in terms of saving interest, just think of them as one big loan rather than two.
          Till the subsidized one is low right?

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            #6
            If I felt I could pay off the smaller loan relatively quickly, I'd pay it first and roll that payment into the bigger loan, and start paying that down at an even more accelerated rate.

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              #7
              Always pay off the loan with the highest interest rate. Or you could try the snowball method right.

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                #8
                I will prefer to pay off the low amount loan first as atleast I will get rid of it quickly, then plan to pay off the big amount loan as soon as possible.

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