<prompt> Human: Hi rpersonalfinance,Im looking for some advice on handling my student loan... you guys always have amazing advice and Im really unsure with this situation.The loan: 20,863 held by the Canadian government at a floating interest rate of prime 2.50. Prime is currently 3.00, but interest wont start accumulating on my loan until I finish my degree in May 2015. No other debt.Im in the final year of my undergrad with just one semester of university left, which Ill be starting in January. In the meantime, Im currently on an 8-month co-op work term May-Dec 2014.Heres the thing: thanks to co-op, for the first time ever, I have personal savings about 3.2k and a decent, steady income roughly 2500m until January. I live alone rent at 700m, no transport expenses as I walk to work and have zero financial support from my family while working or at school living at home is a no-go. My expenses are otherwise minimal.The terms of my loan would allow me to make early payments directly against the principal while still in school. However, I still have one more semester of school that I will have to pay for on my own, although Im hoping for a scholarship to cover the tuition part wont know until August and hoping to score a part-time paid research assistantship at the university for the spring nothing guaranteed, but I worked there last year and they were very pleased with me. Im also planning to go directly into grad school overseas in fall 2015 hopefully with funding, but of course I cant know that until application season.Because Canada has a lifetime limit on how long you can keep interest-free status on a student loan and Ill have spent six years on my undergrad degree two years on co-op, one abroad, interest will start accumulating on my loan about halfway through the first year of my Masters degree which is my terminal degree. I wont have to make payments while Im still in school, but the interest will be adding up the whole time.Should I be using this opportunity to start making payments against the principal of my student loan balance? Or should I try to bolster my savings in anticipation of my last semester and Masters program instead? Im going to feel pretty dumb if I pay back a big chunk of my loan only to have to borrow that money again if my scholarshipjobfunding hopes fall through. And Id rather have debt but some savings than no debt and no savings since I have no overdraft protection with the Bank of Mom Dad if you know what I mean...What do you think, rpersonalfinance? Am I being too risk-averse in hoarding my money as savings rather than paying down the principal of debt thatll bite me in the ass partway through my Masters?  <response>: Save the money until you get your financial aid award for the last semester. That information will be important for making your decisions.Since the loans are subsidized, Id be inclined to take loans for the last semester and not touch my savings at all. Then Id wait until I got my funding information for grad school.If I had funding through a job or fellowship or whatever Id pay the loans down. If I didnt have funding, then its time to compare the interest rate on new loans to the existing loans. If the new ones are a lower rate, take them and pay off the old ones with your savings. If the new ones are a higher rate, pay for grad school out of pocket. 