Will paying off interest on my student loans decrease my financial aide?

Paying for College
1

<p>If I have some extra money and want to pay off some of the interest on my unsubsidized loans will that make my expected contribution higher? What if I pay off part of the student loan? I currently have an expected family contribution of 0 but if I have a little extra money, I’d rather put into paying off the loans than keeping it and maybe blowing it on clothes. But if it makes my expected contribution higher if I start paying my loans off while I am in school I’d rather not… Just wondering how paying off loans while in school changes the expected family contribution…</p>

<p>Thanks!</p>

2

<p>Paying the interest on your unsub loans does not impact your FA directly and is a very good idea. If you reduce the amount you have in your checking/savings accounts before you file FAFSA then it will reduce your EFC. Students have no asset protection allowance and their assets are assessed at 20% in the EFC calculation.</p>

3

<p>Also, it would be worthwhile to take a look at Federal income tax rules that allow deductibility of student loan interest.</p>

<p>Yes, max out the available amount of subsidized interest rate loans each year, and pay off the highest interest rate loans first.</p>