I have been making payment on a SL that is currently deferred while I am in graduate school.  All of my payments are currently being put towards ONLY the principal so the interest continues to accumulate. 

The loan is thru NJCLASS a NJ state loan.  The balance is about 10,735 with a 6.7% interest rate.  My monthly payments are about $110.  While my principal is shrinking, the unpaid interest column continues to grow at about $60/mo. 

Intuitively, I feel like a principal only payment is a better bet but I feel all turned around watching this interest rack up.  Am I making a mistake? 

Thanks for the help!