<prompt> Human: My unsubsidized federal student loans accrued a total of 1200 in interest while in school and go into repayment in February 2015 theyre currently in the 6 month grace period. Rather than pay off that interest now which I am capable of, would it make sense to hold off on paying the interest until JUST BEFORE the grace period ends and they go into repayment? If I understand student loan interest correctly, it does not compound like credit card interest, so the interest does not capitalize until the grace period officially ends in February. This should mean that between now and then the amount of interest that accrues per month will be the same regardless of whether or not I pay off the interest now or wait until then assuming I do not put any money towards the principle. The idea is that until the grace period ends Ill be saving up a 6 month emergency fund and a week or so before they go into repayment Ill pay off the entire 1200 plus all the interest that will have accrued between now and then to avoid having the interest added to the total amount of the loan. Please note that I ALREADY UNDERSTAND THAT THE IDEAL SITUATION IS TO START PAYING OFF PRINCIPLE AS SOON AS POSSIBLE.  <response>: You are correct, the unpaid interest will not capitalize until the end of the grace period. I would also agree that its important to save up an emergency fund before tackling your debt. 