I currently have $0 payments through 10/2026 on PAYE plan. I haven’t made any payments since 2015/2016, before I started professional school, so my interest has obviously accrued significantly. I’ve had some setbacks and only really started earning a higher income in the last year or two. I have 26 different loans, including unsubsidized, unsubsidized, and a few grad plus loans. I included the specific loan amounts for the higher ones below, as well as the general groups of loans with lower amounts.
I want to make a few large payments now that my salary has increased and with my payments being $0, but I don’t know where to start. I figured I would make my first payment that would eliminate the interest of the loan with the highest unpaid interest/principal balance. However, I could take that same amount and knock off the interest rate of the group of 13 loans or two of the other higher loans, with additional money left over to pay towards another loan interest or principal. Alternatively, I could pay off the entirety of 4 or 5 out of the 13 smaller loans. Any recommendations as to the best strategy to pay these off? I want to be agressive, however I'm also trying to save for a home and I unfortunately live in area that has a higher cost of living. I'm also hoping to lower my monthly payments, if possible, when they start up again. For reference, my AGI for 2024 was around $150k with 1 dependent/child, and it will be slighlty higher for 2025. I have an extension for my taxes so I intend to do recertification beforehand.
Another question, if I pay the entirety of unpaid interest for the highest loan, can I make subsequent payments towards the principal for that loan assuming the payment exceeds any interest that accrued at the time of the subsequent payment? Or will the payment go towards the unpaid accrued interest from the other loans?
The following are grad plus loans:
$15,681.00 (7% interest, unpaid $5,705.29)
$24,910.00 (7% interest, unpaid $8,270.10)
$43,486.00 (7.60% interest, unpaid $13,270.82)
$26,426.00 (7.08% interest, unpaid $5,998.09)
$26,803.00 (7.08% interest, unpaid $5,371.36)
I have another 13 that range from $2,000.00 to $5,000.00 (interest rate varying from 3.40% to 7.60%, with total unpaid ~$9k), with only 1/2 of those being between 4-5k.
The remaining 8 loans are $10,250.00, with interest rates between 6% and 6.60% (total unpaid ~$20.4k)
Paying back loans – where to start?
byu/No_Material_4585 inStudentLoans
Posted by No_Material_4585