Student loan update: Interest rate edition

In my last progress report, I mentioned that I took my student loans off Kwik-pay (autodebit) until after closing on my house. The thinking was that I'd have the money just in case things didn't go smoothly with the house and move. Originally, I thought I'd re-enable the automatic payments after closing.

Then I realized that if I kept my student loans on manual payments, I wouldn't be at the mercy of my lender in terms of how payments were allocated. I assumed that I was no longer receiving an interest rate reduction for being on Kwik-pay. Nothing about an interest rate reduction was listed anywhere that I could see in their account interface.

However, it turns out that I was getting an interest rate reduction. Although I didn't receive any sort of notification, after removing Kwik-pay from my account, I noticed the next time I logged in that the interest rate was now listed at 4.75 percent. Previously, it was 4.5 percent.

Argh. So now I am faced with a choice. Should I pay a slightly higher interest rate for the privilege of being able to allocate every payment exactly how I want to? Or should I re-enable Kwik-pay and get the interest rate reduction?

In Favor of Flexible Payment Allocation

My current minimum monthly payment is $390.95. Of that, $244.54 is supposed to go to the larger balance of $57,499.51. The rest of the payment, $146.41, is supposed to go to the smaller balance of $33,077.20. I can use the online interface to direct extra payments however I want; I had been allocating them to the smaller balance.

However, if I was paid ahead on the smaller account, then my lender would automatically direct the entire minimum monthly payment to the large balance. On the one hand, this isn't a bad thing. I am not going to pay off my student loans in a year, but I was paying ahead on both accounts.

On the other hand, the entire reason I was making the extra payments was to pay off the smaller balance as quickly as possible. That way there would only be one account left, which would provide a psychological boost and some motivation on the road to debt freedom. Also, if I fell upon tough times, then having fewer monthly payments would increase my financial flexibility.

In May, for example, I made over $800 in payments to the smaller balance and $300 in payments to the larger balance. That included paying my April bill 5 days late (I was paid ahead on the account so no late fees for this), my extra payment, and my regular May payment. Had Kwik-pay been enabled, only $500 would have gone to the smaller balance and $600 would have gone toward the larger balance.

In Favor of Interest Rate Reduction

Obviously, on a balance of around $90,000, the difference between 4.5 percent and 4.75 percent is significant. It's actually somewhat difficult to determine the exact savings, however. I'm on a graduated payment plan and my servicer doesn't provide information on when the payment resets or by how much the payment will increase.

Additionally, student loans typically amortize like a mortgage does. In the beginning of the loan term the majority of the monthly payment goes to interest. Over time, more and more of the monthly payments are allocated toward principal. In addition, my servicer doesn't provide an amortization schedule. All I can see is how much of each payment I make is allocated to principal or interest, as well as how much interest has accrued since my last payment.

I did plug some numbers into a mortgage amortization calculator to give myself a rough idea of the amount I'd save at the lower interest rate. I assumed a balance of $90,000, a 20-year term, and no extra payments. Using those numbers, my savings would be in the neighborhood of $3,000 over the term of the loan.

Obviously, $3,000 isn't chump change. That's a significant amount of money! There's also the small but psychologically significant fact that I now have a mortgage with a rate of 4.65 percent. If I keep my student loans on manual payment, my interest rate on my student loans will be higher than my interest rate on my mortgage!

What Would You Do?

As I noted above, my assumptions regarding my student loans assume no extra payments. However, I have been consistently making extra payments and plan to continue to do so. That fact alone changes the numbers quite a bit. As a result, I am tempted to keep things flexible with manual payments. Paying off the small balance the fastest motivates me the most at the moment. That doesn't mean I'll always feel that way. Of course, I can re-activate Kwik-pay at any time.

If, down the road, I decide that the interest rate is the psychologically bigger deal, I can make a change. Perhaps after I've paid off the smaller balance completely and there's only one place for any payment to go? I also remain hopeful that there will be some sort of student loan reform (not necessarily forgiveness) that will resolve some of the frustrations I have with my servicer.

My optimism stems in part from the existence of the Consumer Financial Protection Bureau (CFPB). The CFPB was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). It was formed in large part because of the advocacy work of Senator Elizabeth Warren, who also wrote All Your Worth: The Ultimate Lifetime Money Plan.

The CFPB takes complaints about student loan companies on their website and investigates them. In December, they issued a ruling that will enable them to provide oversight of nonbank student loan servicers with more than one million borrower accounts. They already provided oversight of banks acting as servicers. So help is on the way!

Senator Warren has also been extremely active in proposing legislation to provide relief to individuals with student loans, most recently the Bank on Students Loan Fairness Act. With #StudentLoanDebt trending like it is, I think it's only a matter of time before the situation improves considerably for everyone with student loans.

If you have student loans, what interest rate are you paying? Do you pay more than the minimum amount due and, if so, how do you decide how to allocate those payments?

More about...Debt, Budgeting, Planning

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Tina in NJ
Tina in NJ
6 years ago

The lack of transparency on your servicer’s website is appalling! Despite the sclerosis in Washington, that’s something that might actually get better. If I were in your position, I’d be manual until I got the smaller loan taken care of, then go back on automatic. Good luck!

Honey Smith
Honey Smith
6 years ago
Reply to  Tina in NJ

I’m such a type A that having control is always more appealing. I just want to be sure that I’m not being irrational about it!

Sean F.
Sean F.
6 years ago
Reply to  Honey Smith

I agree even though I’m not that Type A.

With student loans I did manual because I preferred tagging it to certain loans so I could take down the highest interest ones first.

Also it gave me “reassurance” that if all hell broke loose my money was a bit more liquid than if I had it auto draft.

For your loan amount though I’d see about them allocating your auto-payment in the way you want though since it is such a large amount. Save the money while getting it applied like you want manually.

Natalie @ Financegirl
Natalie @ Financegirl
6 years ago

This post is near and dear to my heart, as I have $160k in student loans left from law school (I started with $206k!). Really, if my interest rates were around 2-3% instead of 6-8%, I would be able to pay down the debt sooo much faster. Instead, I pay minimum on certain loans and the rest on one loan so that I can pay that loan off fast, then snowball it onto the next loan.

Honey Smith
Honey Smith
6 years ago

I know some folks with that much student loan debt (I’ve actually been fortunate, relatively speaking). I actually kind of wish that I hadn’t consolidated because then I could really maximize what you are describing (the debt snowball strategy).

imelda
imelda
6 years ago
Reply to  Honey Smith

I’m actually glad, overall, that I consolidated my loans. Even though I did so at a high rate (6.25%), just 2 years or so before rates plummeted.

Because my loan has been sold so many times, and changed hands across so many new servicers. I can’t imagine keeping track of that for four or more different loans!

Money Saving
Money Saving
6 years ago

I think you are on the right track Honey. Having more control over how you allocate your money is worth the extra 0.5% you will pay at least until you get the smaller balance killed!

Jon @ Money Smart Guides
Jon @ Money Smart Guides
6 years ago

I hated all of the little things like this when I was paying off my student loans. Like you, I wanted the majority of my payment to go towards the smaller balance first, to provide a mental boost. But no matter how many times my service provider explained how they apply payments, it never made sense to me. Needless to say that I couldn’t pay off the smaller balance first. Additionally, I too couldn’t get an amortization schedule. I think for a loan, they should be required to give one out or at least have it on their website for… Read more »

Honey Smith
Honey Smith
6 years ago

Yes, I think I will at least give this way a try for a few months to see how it works for me. It’s amazing how little info the servicers are required to give, isn’t it?!

Jen From Boston
Jen From Boston
6 years ago

I can’t believe the nonsense you have to go through with students loans. It’s outrageous you’re not giving an amortization schedule!!!

Lily
Lily
6 years ago

Can you do both? For example, lock in the 4.5 percent rate by automating the minimum payment required each month, and then pay above an beyond whatever else you want to allocate? Maybe you can get the best of both worlds.

Honey Smith
Honey Smith
6 years ago
Reply to  Lily

That’s what I was trying to do before. It doesn’t work, as I said above: “My current minimum monthly payment is $390.95. Of that, $244.54 is supposed to go to the larger balance of $57,499.51. The rest of the payment, $146.41, is supposed to go to the smaller balance of $33,077.20. I can use the online interface to direct extra payments however I want; I had been allocating them to the smaller balance. However, if I was paid ahead on the smaller account, then my lender would automatically direct the ENTIRE minimum monthly payment to the large balance.” There is… Read more »

Lisa
Lisa
6 years ago
Reply to  Honey Smith

I am the Director of Financial Aid at a small, non profit University, so have experience working with various lenders and servicers. In my experience, lenders/servicers can make it difficult but not impossible, to allocate the additional funds as you wish. If you set up autopay for the minimum monthly payment (in order to achieve the interest rate discount), they may automatically apply additional payments in one way, but they should have a way to contact (either by email or phone) each time you make a manual payment to specifically request that it does not further the payment date, but… Read more »

Holly@ClubThrifty
6 years ago

The control freak in me would want to pay the smaller loan off manually. Could you switch back to automatic payments once the small loan was gone?

Your situation sounds maddening to me. They should make your loan pay off easier- not harder! I can’t believe you have to jump through so many hoops. =/

Honey Smith
Honey Smith
6 years ago

Holly, yes I am thinking that I will switch to manual payments once the small loan is paid off. Then I can get the interest rate reduction and there is only one account for any payment to go to. Even more motivation to pay off the small loan faster!

Ely
Ely
6 years ago
Reply to  Honey Smith

This is what I would do. I agree that the psychological boost from paying down that smaller loan is well worth the extra interest you pay in the short term. I was obscenely lucky with my student loans – I don’t know if it was timing (I finished school in 2005) or just the roll of the dice. I consolidated all my loans (all subsidized) into one, I pay about 1.5% (including autopay discount and another discount I got for paying the first 6 months on time), I get an amortization schedule and helpful responses to any emails, and I… Read more »

malcom
malcom
6 years ago

I think this post and your last post are missing the bigger financial picture. It appears you may be finanically over extended. In your last post you stated that you put less then 20% down. You have now committed yourself to paying the bank insurance in case you are uanble to pay your mortage. This post says you are on a graduated repayment plan. You are paying alot more interest on a graduated repayment plan. The amount can jump sharply. I believe you said you do not know when and how much the student loan will increase. If you do… Read more »

2annabelle
2annabelle
6 years ago
Reply to  malcom

I completely agree with Malcom. You have way too much debt – you had too much debt before you bought the house! I understand the pros/cons for buying vs renting, but with renting you don’t have to pay for upkeep & maintenance and replacement of appliances because you don’t own them. At the rate you’re going with your loan payments, there’s 19 or 20 years of payments left – I find that incredible, particularly when you’re not making very much money per year by your own admission (I think it was in the $40k/year area?). How can you not know… Read more »

tas
tas
6 years ago
Reply to  2annabelle

With student loans, you do not get to choose your loan provider. I hated how Sallie Mae handled my undergrad loans so refused to use them for my graduate loans. 2/3 of my graduate loans were then sold to Sallie Mae… And Honey is spot-on about how difficult it is to learn basic information about your loans. I emailed Sallie Mae to ask when my first payment was due because I could not find the information anywhere on their website — they told me the wrong starting date. (Luckily I keep an eye on bills so noticed when the payment… Read more »

Honey Smith
Honey Smith
6 years ago
Reply to  malcom

I have had an emergency fund since 2009. Since I started writing for GRS, it has been $4500. It’s still at that amount (in other words, my e-fund was unaffected by the home purchase). I could add to it, but I prefer to direct additional funds to my loan right now. PMI is not ideal, but it’s temporary (8 years assuming no property value increase or extra payments). A higher interest rate would be forever, and since we had to move anyway due to our rental being foreclosed, we decided to buy now. Since we knew that we weren’t going… Read more »

Sean F.
Sean F.
6 years ago
Reply to  Honey Smith

I personally love you buying instead of renting. If you are going to house yourself might as well not waste it. If you could get an apartment for 500 bucks cheaper than your mortgage then you should rent but if it is even within a few hundred bucks it’s worth buying. Why put off building equity 20 years until your loans are paid off? I’m in a mortgage tied to my two mothers right now to help them out and I’m not ready to buy but admire that you have. At least once it is all paid off you’d have… Read more »

TheGooch
TheGooch
5 years ago
Reply to  Sean F.

2 words – down payment. If you are doing a debt snowball, there is no room to accumulate the 20% for a down payment on a home, closing costs, etc. Then there is the stress of having another huge debt on top of the student loan and other debts. When you are trying to get out of debt, adding another one to the heap can change your word view, causing stress and stress-related problems.

Jen From Boston
Jen From Boston
6 years ago
Reply to  malcom

One thing that to consider wrt the house purchase is that Honey’s HUSBAND is included in that, and he has a high income, IIRC. It’s not as if Honey is paying for the mortgage all on her own. Further, I don’t know how rents are where Honey lives, but in Boston they’ve gotten pretty high in the past few years. In fact, I realized last week that I am now paying LESS in mortgage, homeowner’s, property tax, and condo fees than I would if I was renting. So owning a home might stabilize their expenses if their rental market is… Read more »

Amy
Amy
6 years ago

Can you make two payments a month? Have the minimum payments on autopay, then make a second for the extra which you can allocate to the loan you want.

Aaron
Aaron
6 years ago
Reply to  Amy

I agree with Amy’s suggestion. It’s pretty much the way I do it, though I consolidated when rates were significantly lower, so it’s one of my cheaper debts and I pretty much just stick with the minimums (mortgage gets priority). The lower rate from auto-pay is worth it to me.

Becky @ RunFunDone
Becky @ RunFunDone
6 years ago
Reply to  Amy

This is what I was thinking as well! – Minimum payment on auto, and then manually add to the principle of the smaller loan.

Jessica
Jessica
6 years ago

This is what I do – works like a charm. I think we may have the same servicer (Granite State?) based on the issues with them that you list. If you do have GSMR, I did find a way to get an amortization schedule on the website under the Widgets application. Good luck!

Honey Smith
Honey Smith
6 years ago
Reply to  Amy

Unfortunately, if I make any extra payment towards the smaller balance, then the ENTIRE $390.95 gets allocated towards the larger balance (if I’m on autopay). So I can’t do it the way you suggest if my goal is to pay off the smaller balance asap.

My servicer is Oklahoma Student Loan Authority (OSLA). I think they all work the same though (in fact, I suspect they all use the same interface/program).

Duane
Duane
6 years ago

I’m curious, when you talk about paying extra, are you telling your lender to put the entire additional amount to principal or are you allowing them to count it as an early payment? From what I recall from my student loan debt, if you just send extra money, they pay your next payment, including the interest portion. But, if you directed them with each payment to put the entire excess amount toward principal, it reduced the total amount owed more quickly. Some lenders do it right automatically, but not everyone. Considering the lack of transparency from your lender, I would… Read more »

Honey Smith
Honey Smith
6 years ago
Reply to  Duane

There is a button in their payment interface that says “do not advance due date” when you make an extra payment. I always click it, though from what I can tell the due date is always advanced anyway. However, the only interest that I pay when I do an extra payment is however much has accumulated since my last payment. So I do my extra payment mid-month and my regular payment at the end of the month to minimize this. I am sure I could pick a fight every month and spend several hours getting everything reallocated the way I… Read more »

Erica
Erica
6 years ago
Reply to  Honey Smith

Why don’t you call and talk to a human being instead of just going by buttons on the website and assumptions of what is or is not happening?

Being in this much debt is serious business, and it’s worth the extra time to understand the system and make sure your money is going where you intend it to go. I don’t think you’ll need to “pick a fight every month,” but yes, you probably will need to invest some time upfront in fighting the phone tree until you find a human that can help you get this settled.

Honey Smith
Honey Smith
6 years ago
Reply to  Erica

Now that I’m making payments manually, I control which account every penny goes to. I also know EXACTLY how much of my payments are going to interest and how much to principal before I make them. I have the freedom to adjust my payments accordingly (to make sure I pay at least the interest on the large balance and some principal) and direct the majority of my money where it will have the biggest impact. On the auto-pay option things were never clear, and even if I understood, I would STILL have had to call every single month to get… Read more »

LeRainDrop
LeRainDrop
6 years ago
Reply to  Honey Smith

I think the problem is that you are clicking “do not advance due date.” I was able to use both Kwik-pay (to take advantage of the interest rate reduction) AND manual payments (to target which loan I wanted the extra amount to go towards). As long as the due date was advanced with each payment, then the Kwik-pay was correctly allocated, and my manual payments were applied to the loan I selected.

Honey Smith
Honey Smith
6 years ago
Reply to  LeRainDrop

Interesting!

Rob
Rob
6 years ago

I’m willing to pay a slightly higher amount to be in control.

Sally
Sally
6 years ago

Honey,

This issue seems overly complicated to me.

Save the money, automate your regular payment on both accounts and take the $3000 deduction.

Since the servicer has two separate loans recorded, send your extra payment, by mail, with your prepared letter stating the account number it should be allocated to. It’s really a PIA to have to do, but quite simple. I did this for years with a similar servicer problem.
As for Elizabeth Warren’s reforms, they are great, but not something to hope for to the point they replace making the extra effort to save 3K.

Honey Smith
Honey Smith
6 years ago
Reply to  Sally

The issue has never been mis-allocation of my extra payments toward the smaller account. The issue is that if I make extra payments to my small account, the ENTIRE “regular” payment will ALWAYS be applied to my larger account (instead of being split between them). I assume they have their system set up to maximize the amount of time it will take to pay off my loans. The $3000 is my best estimation of how much more I will pay over the lifetime of the loan by doing things manually. That estimate, however, assumes no extra payments, so I think… Read more »

Erica
Erica
6 years ago
Reply to  Honey Smith

Sally is offering you a solution to the exact problem you’re describing.

Sally
Sally
6 years ago
Reply to  Honey Smith

That is not what I said, Honey. Here is how I paid off three loans with my servicer who was doing the EXACT SAME THING YOU DESCRIBED. 1)Pay all of them online and get your interest. 2) In a separate letter, write: Dear servicer, I recently experienced a budget surplus. I am enclosing XXX in addition to my regularly automated payment that has been distributed across all loans. As per my initial loan agreement with XX, and as part of the loan servicing rules, I instruct you to apply this extra payment, in the amount of XX directly to reducing… Read more »

Honey Smith
Honey Smith
6 years ago
Reply to  Sally

Thanks for clarifying! I appreciate it.

Paularado
Paularado
6 years ago
Reply to  Sally

I used to do that with a HELOC. In order to get the extra payment applied to principle only, I had to send a check by mail. No big deal. I just prepared 12 versions of the letter and envelopes in advance and I was set for the year.

Michelle
Michelle
6 years ago

I have multiple student loans and right now we are doing the snowball effect. I can’t wait until these loans are gone for good!

Ray
Ray
6 years ago

Are the loans all the same interest rate or different rates? If they are the same interest rate, aren’t we just dealing with a distinction without a difference?

If you need the psychological boost from having fewer loans, try to transfer it to goals on your balance. For example, every time you get under a multiple of $10K, you have reason to celebrate and feel like you are making progress. Or you could focus on how much is going toward interest every month, whatever floats your both.

Jonathon Barton
Jonathon Barton
6 years ago

Honey, (wait…is it just me, or does it feel a little odd calling someone by their given name, when that name is simultaneously a common endearment?) Take the massively extravagant sum of $12.50 per month and stuff it in a mattress (at 0%) 240 times. There’s your $3000 difference between the two interest rates. Using an amortization calculator – $90,567.71k for 20y @ 4.75, the payment it comes up with is 585.33, and the payoff is 6/9/2034. For 4.5%, it’s $560.88. Adding the (super extravagant sum of!) $24.45 between the two payments back into the 4.75% payment gives a payoff… Read more »

Sara
Sara
6 years ago

Thanks! Maybe it’s just me, but I was really shrugging my shoulder at $3,000 over 20 years. I mean, I’m not rolling in it myself – I make slightly less than Honey does – but over 20 years $3,000 just isn’t that much money. Especially if you think about inflation. So if it’s that important to you to allocate every single payment perfectly, then pay the extra $3K.

Shari
Shari
6 years ago

My student loan company will not allow me to direct where payments go to even though I pay manually. I asked how to specify that I want extra payments to go to principal only and they said they do not allow that. Student loan companies are all about keeping you paying on those loans forever.

tas
tas
6 years ago
Reply to  Shari

According to this website (http://www.finaid.org/loans/prepayment.phtml), what your loan company says is illegal, even if you have a private loan. If it’s a government loan, contact the ombudsman; if it’s a private loan contact the CFPB (http://www.consumerfinance.gov) immediately.

I was frequently told by my lender (and school) something that directly contradicted the terms of the loan & had to contact the ombudsman to straighten it out — the loan company was required to refund the 4 years of extra interest I had paid because of their error.

Honey Smith
Honey Smith
6 years ago
Reply to  tas

This is amazing, you should submit a reader story about that.

Aldo @ MDN
Aldo @ MDN
6 years ago

I did the same thing you are doing. Stopped the autopay so I can have complete control of how much to send each month. Before, I just forgot about the payments because they were automatic and ended up just paying the minimum.

My interest rate went up as well but I don’t care. I’m paying it faster now than I ever did. I’ll probably end up paying less in interest in the long run because of my move.

Keep at it.

b
b
6 years ago

I have two loans, a larger and a smaller. Rather than dealing with ensuring that the loan servicer applied extra payments as I wanted (I’ve had similar issues), I simply put my “extra payments” into a separate account. When this balance gets high enough, I’ll pay off the entire smaller loan in one shot. Pretty sure they’ll have to apply that the way I ask. Though at the moment it’s invested in an index fund and getting pretty darned good returns, so I may hang on to it a bit longer. 🙂

H
H
6 years ago

Oh gosh, Honey, that’s frustrating. I had a student loan that I literally just paid off last month; over the time I had it, the student loan servicer (Nelnet) changed and updated their website about a billion times, which roughly fixed this problem for me. They made it so you could actually click on the particular loan you wanted to pay, and make the payment to that particular subgroup. That said, before they did it, I was having a similar problem. Here’s a question… are you paid up on your interest, such that you are only paying the interest that… Read more »

Honey Smith
Honey Smith
6 years ago
Reply to  H

Yes, I’m paid up on interest, so my payments only go to whatever interest has accrued since my last payment, and the rest to principal.

Merry
Merry
6 years ago

Just a few of comments. First, I know that not all loan servicers use the same interface/program because my husband and I both have loans serviced by different companies. His servicer provides a lot more/better information. Too bad you can’t pick who your loan will get sold to! Second, I agree with an earlier commenter that if the interest rates on the two loans are the same, I wouldn’t worry about paying off the smaller loan first. You might be able to gain just as much of a psychological boost from tracking your monthly contributions or your falling loan total… Read more »

Dan
Dan
6 years ago

Option 3. Turn it back on and store the extra away where it doubles as an emergency fund. When you have enough to put a massive dent or eliminate the small loan turn it back off, pay off the small one, and put it back on until the large one is gone

Melanie@Dear Debt
6 years ago

I have 33k in graduate plus loans with a mixed interest rate of 6.8% and 7.9%!!! OUCH! That total used to be 58k though, so I’ve made a ton of progress. My undergrad loans are at 7k at 2.5% interest. For my health and sanity, I am trying to pay off my grad loans asap. For me it makes sense to pay off the debt with the higher interest.

Dan
Dan
6 years ago

I’ve got about 40k in student loans left to pay.. it seems pretty daunting. My friend showed me this cool tool that he used when he was in debt to give himself a better idea of the situation he was in.

http://www.helpwithdebtconsolidation.co.uk/you-vs-the-nation/index.php

Pretty cool!

Sarah
Sarah
6 years ago

I Kwik-pay the minimum on my $73,000 student loan, which is $654/month. Then I put extra money towards the loan with the most interest (8% vs. 6.8%).
My question to you is which repayment plan are you on? I’m shocked that you are only paying $300+/month on a $90,000 loan and I pay $654 on mine. I chose the graduated repayment plan.
Thanks!
Sarah

Lady
Lady
6 years ago

I also chose to do the graduated payment plan for multiple loans at multiple interest rates, so that Kwikpay would deduct the smallest amount possible every month for now (still in the first year of repayment). Then I make extra payments on my loan with the highest interest rate. Just like you (even though I checked “Do not Advance due date” when making manual payments, it pushed my higher interest rate loan’s due date back, and kwikpay deducted the same amount every month, and the money that “Should” have been applied to the high interest rate loan went to loans… Read more »

Amber
Amber
6 years ago

I’m paying 5.6% on $61,000. It would be 5.8%, but I have it on auto draft to get the “discount”. My servicer is pretty transparent and I don’t really have any complaints. I pay extra every month and next year I am going to start paying $1,000 a month on top of my monthly minimum payment of $373. It will hurt, but I have to get out from under this burden. :/

Komrad
Komrad
6 years ago

I”m doing something similar to what you did right now. I’m making IBR payments on my consolidated student plan while saving for a down payment on a house. The house payment will be less than my rent, giving me room for extra expenses while building equity. After the home purchase, I’ll through all my discretionary income into the student load and have it paid off in 2 years. I could move to a larger apartment to get me the space that I need, but I feel it’s better to deal with the really small apartment for 12months and get a… Read more »

mginwa
mginwa
6 years ago

My student loan servicer does the same thing with overpayments. I got around it by having them break my loans up into multiple loan groups. It means that each loan group has its own autodebit so it takes more than one payment out of my checking account each month (one for each loan group) but I don’t care, since the total amount is the same. The loan I am targeting paying off more quickly is then in a loan group all by itself, and when I make excess payments, there is nowhere for the autodebit payment to be redirected, so… Read more »

Dee
Dee
5 years ago

I have the same issue but my work around has been to keep the Kwikpay to get the interest reduction and then to enter in Bill pay on my bank website. Each of the loans has a different account number so when I send any extra payments through billpay it goes to which ever account I have specified.

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