Best option to pay these student loans?

[hatecollege]

I have two major loans right now.

Loan one: 26k at 7.75% interest.
Loan two: 26k at 8% interest.

I plan to pay at least $1,400/month for the rest of this year. I think I may get a 2% reduction in interest rate if I graduate on loan one. Would it be better for me to split my payments 50-50 between the two, or pay just the interest on one and focus on the other one. I'm just wondering what will save more money.

I have some other student loans but they're much smaller in balance and in interest. I'm still in school until December so I don't have to pay anything.

Thank you so much for any help.

[disneysteve]

What saves the most money is paying the loan with the highest interest rate, though in this case, the difference will be pretty minor since the rates are within 0.25% of each other. Still, if you have to pick one to pay extra on, pick the one with the highest rate.

[hatecollege]

What saves the most money is paying the loan with the highest interest rate, though in this case, the difference will be pretty minor since the rates are within 0.25% of each other. Still, if you have to pick one to pay extra on, pick the one with the highest rate.

Thanks. Would it be wise to at least pay the interest on the loan with the lower interest rate? Because otherwise the interest capitalizes and adds to the principal.

Thanks again.

[disneysteve]

Thanks. Would it be wise to at least pay the interest on the loan with the lower interest rate? Because otherwise the interest capitalizes and adds to the principal.

Thanks again.

Absolutely! You definitely want to avoid the capitalization. I had a lot of friends who didn't do that when we were in med school and they got nailed by that. They ended up owing tens of thousands of dollars more than they actually borrowed. I was able to pay the interest along the way and it made repayment a lot better (as good as repaying 102K of debt can be).

[hatecollege]

Great. Thanks.