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Student Loan question- paying on interest

I have about $26,000 in consolidated student loans. My payments are $133 a month, I usually pay $150-200$ a month. But of the almost $1,000 that I have paid so far less than 50$ of it has gone to the principal. It's all going to interest! My last $150 payment went entirely to interest. I pay it online (Lower interest rate to do it online), so I don't know if I can specify if I want it to pay the principal or interest. Does anyone know about studnet loans? (It's a Direct Federal loan). How can I start paying on the principal instead of just interest? I can't really afford to pay more than 200$ a monht on it until I get some other stuff paid off and taken care of.

Answer Question
 
jedwards2009

Asked by jedwards2009 at 6:59 AM on Jun. 30, 2011 in Money & Work

Level 17 (3,282 Credits)
Answers (5)
  • I don't know what type of interest rate you got but you may want to look into other companies like Sallie Mae. that's the thing with loans, more goes toward the interest then the actual balance for many years. You really need to get the lowest interest rate you can find. As soon as I got out of school and my loans started, I consolidated them with Sallie Mae so I could get a lower rate. You can go to their website and check it out!

    anichols1

    Answer by anichols1 at 7:19 AM on Jun. 30, 2011

  • That doesn't seem right. If your required payment is $133 then that should cover all of the interest and at least a little bit of principle. How can $150 not have at least $17 going towards interest. Anybody know how to ask for am account review? If is was with a local bank I would just walk in and ask them to explain it to me. 

    LoveMyDog

    Answer by LoveMyDog at 12:55 PM on Jun. 30, 2011

  • I meant $17 towards principle
    LoveMyDog

    Answer by LoveMyDog at 12:56 PM on Jun. 30, 2011

  • You probably need to specify it. I would call whomever is handling the student loans and talk to them about it. Maybe you will have to mail in a paper check and specify principle? But talk to the loan people and find out how they exactly how thye want you to do that.
    Candi1024

    Answer by Candi1024 at 1:51 PM on Jun. 30, 2011

  • You want to make sure your paying both interest and principle every month otherwise it could be considered late. And if you specified you might have your minimum payment set up to pay interest only. Pretty sure most student loans give you 10 years before you have to pay it off- so technically you could just pay on the interest for the next decade and be considered fine.

    To be totally blunt though, you've got a lot of debt and you're not paying very much on it. And what you are paying is almost entirely going to interest. So if you can, I'd up the payments- even double them and get the student loans out of your life.

    Now with extra payments you do want to specify that they are for principle only. Never pre-pay interest, and never pre-pay payments.
    Erica_Smerica

    Answer by Erica_Smerica at 5:47 PM on Jun. 30, 2011

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