Prepayment penalties?

[confused48]

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This is probably a dumb question, but here goes anyway. If you take out Subsidized and unsubsidized Stafford loans to pay for med school and part way through school you inherit some money--can you pay the loans back early? Is there a penalty for doing so?

Thanks

 

[Miami_med]

This is probably a dumb question, but here goes anyway. If you take out Subsidized and unsubsidized Stafford loans to pay for med school and part way through school you inherit some money--can you pay the loans back early? Is there a penalty for doing so?

Thanks

No

 

[confused48]

No

No what? No you cannot pay them back or No tere is no prepayment penalty.

 

[dpmd]

You could pay them back whenever and as fast as you like, and there is no prepayment penalty. You can also just pay back the unsubsidized ones and leave the subsidized ones until you are out of deferment if you wanted to earn some interest on that inheritance.

 

[confused48]

You could pay them back whenever and as fast as you like, and there is no prepayment penalty. You can also just pay back the unsubsidized ones and leave the subsidized ones until you are out of deferment if you wanted to earn some interest on that inheritance.

Very clear answer 👍 👍

 

[edubbs5]

Agreed - in situations where you are able to PREPAY - you should be sure you are paying down interest first. So that you can avoid all of your interest capitilizing when entering repayment.

Good luck!

 

[dpmd]

One other thing I wanted to add. If you end up having some extra money and you want to make some extra payments (during deferment or repayment), check to make sure they are applying it appropriately. The most advantageous interest-wise is to have any money left over after paying any accrued interest applied toward the principal. This means you will accumulate less interest the next month, since it is based on the principal balance. However, lots of companies apply your extra payment as a prepayment for next month's bill. This means you pay a little more in interest. Not good unless you have some extra money now, but aren't sure you will be able to afford payments later (and are too undisciplined to save for the future). If that is the case, your due date gets pushed back, and you may use that as a "skip a payment in the future" card.