Author Topic: Extra Student Loan Payment  (Read 979 times)

Kjmiller1984

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Extra Student Loan Payment
« on: October 02, 2015, 10:36:10 AM »
I called Navient to make an extra student loan payment towards the principle and they told me that in order to make an extra payment towards my principle i had to make the payment on the same day as my auto pay. They said that otherwise part of the payment would go to interest and then principle. Sounds fishy to me. What do you guys think?

DaveR

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Re: Extra Student Loan Payment
« Reply #1 on: October 02, 2015, 10:53:44 AM »
I think it's legit.

When you make a normal loan payment each month, you are paying 100% of the interest accrued since the last payment (say 30d worth) and some principle.

If you make an extra payment, say 10d after your normal payment, they are saying that the payment will be applied as paying 10d of interest with the rest going to the principle.

When your next normal payment goes through, you'll pay 30 - 10d = 20d of interest instead of the usual 30d. So more of your normal payment goes to the principle.

Apples

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Re: Extra Student Loan Payment
« Reply #2 on: October 02, 2015, 12:14:35 PM »
Interest accrues daily on student loans.  So if I make my regular payment on the 1st, and then an extra payment on the 15th, the extra payment will first go towards the interest that has accrued over the last 15 days, then towards principal.  And then on your regular payment on the first of the following month, there will be less interest due with that payment because you paid off extra principal and interest on the 15th and interest has only been accruing since your last payment on the 15th.  Does that make sense?

thd7t

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Re: Extra Student Loan Payment
« Reply #3 on: October 02, 2015, 12:18:54 PM »
I ran into this with Sallie Mae (now Navient) and another loan servicer 9 years ago.  It is a pretty common stipulation.