Can my daughter make early payments on federal student loans before graduation? Will it reduce principal?

Yes, she absolutely CAN make payments early and it's actually a really smart financial move! I did this with my own loans years ago. For the unsubsidized loans, interest has been accumulating since day one of disbursement, so early payments will first cover that accrued interest, then hit principal. For subsidized loans, no interest accrues until after the grace period, so early payments would directly reduce principal. The loan servicer website should have a payment portal active even during school/grace periods. Just make sure she creates an account with her loan servicer if she hasn't already. Also important - when making payments, she can specify which loans to apply payment to (target the highest interest ones first!). Making early payments won't affect forgiveness options at all - those programs are based on qualifying payments made during the official repayment period.

my kid graduated last yr and we didnt know u could pay early!! wish someone told us b/c by the time the bills started coming the interest had added like $2100 to the total!! def tell ur daughter to start paying asap especially on the unsubzidized ones they're the killers with interest

Just want to add something others haven't mentioned - if your daughter makes payments during grace period, she should save all confirmation numbers and take screenshots of payments. My son had issues where early payments weren't properly credited to his account and it took MONTHS of calling to get it fixed. The loan servicers can be really disorganized sometimes!!

One strategy your daughter might consider is making interest-only payments on the unsubsidized loans while still in school/grace period. This prevents the interest from capitalizing (being added to the principal) at the end of the grace period. Once interest capitalizes, you end up paying interest on interest, which really increases the total cost over time. Also, if she's considering income-driven repayment plans in the future, starting payments early won't affect her eligibility, but those early payments won't count toward forgiveness requirements. Only payments made under a qualifying repayment plan after the official repayment period begins count toward things like PSLF or other forgiveness programs. She should look into the 0.25% interest rate reduction for setting up autopay once repayment officially begins too!

When I tried making early payments last year it was a complete NIGHTMARE getting through to my loan servicer for help. I'd call and be on hold for 2+ hours only to get disconnected. Ended up wasting an entire weekend trying to figure out how to apply extra payments to principal. If your daughter runs into the same issues, check out Claimyr.com - it got me through to a live agent in under 10 minutes after days of frustration. They have a video demo showing how it works: https://youtu.be/TbC8dZQWYNQ Seriously saved my sanity when dealing with loan servicer phone trees!

CONGRATS on being almost done with college payments!!! I'm still 5 years away from that milestone with my youngest 😫 Another thing about those student loan payments - make sure your daughter checks if her future employer offers any student loan repayment benefits! My daughter's company pays $150/month toward her loans as a benefit. She still makes her own payments too, but that extra help adds up. More companies are adding this as a benefit to attract new grads.

can she refinance right after graduation to get a lower rate? my cousin did that and saved a bunch but idk if thats always smart????

Quick update on something I forgot to mention - when your daughter makes payments during the grace period, she should specifically request in writing (email or through the servicer's message center) that the payment be applied to principal after any outstanding interest is paid. Otherwise, some servicers will just apply it to future interest or hold it as an "advance payment" that doesn't reduce principal at all. The exact wording to use is: "Please apply this payment to outstanding interest first, and then to principal balance reduction on loan [specific loan ID], not as an advance payment.

As someone who just went through this process with my own daughter last year, I can confirm everything others have said is spot on! One additional tip - if your daughter is working part-time or has summer income, even making small payments of $50-100/month during the grace period can make a huge difference. My daughter made $75/month payments for 6 months and it saved her about $800 in interest over the life of her loans. She used a budgeting app to set aside the money automatically so she wouldn't even miss it. The psychological benefit was huge too - she felt like she was being proactive about her debt instead of just watching it grow. Also, Great Lakes has a pretty user-friendly online portal where she can see exactly how payments are being applied. Much better than some of the other servicers I've heard horror stories about!