How to Make Extra Student Loan Payments
Loans are often one of the most stressful parts of college for students. But if you have a financial plan set in place after college, paying your loans off may not need to be nerve-wracking. In fact, you have the opportunity to get ahead on your loans payments. There are no penalties for making loan payments early, so nothing can stop you from doing so. Just make sure that you follow the correct procedures so everything goes smoothly!
First and foremost, you should tell your lender how to handle the extra payment.
Mark Kantrowitz, Cappex Publisher and VP of Strategy, said: “You need to be careful to prevent the lender or servicer from skipping payments. Include a letter with the extra payment to specify that the extra payment should be treated as an extra payment and not as an early payment of the next installment.”
Be sure to inform your lender how that payment should be allocated. If you do not specify which loan you’d like the extra payment to go towards, your lender may apply the payment to the wrong loan. Kantrowitz suggests you apply the extra payment to the loan with the highest interest rate, because this will save you the most money in the end and pay off all your loans quicker. But if you have multiple loans with the same interest rate, you should apply the additional payment to the loan with the lowest outstanding principal balance remaining.
If you have any additional questions about making student loans, be sure to talk to your loan servicer. They are there to make sure your loan payments go smoothly!
When financial aid and federal student loans aren't enough to cover all college costs, consider financing the gap with private student loans. Shop around to find the loans that best fit your needs.