Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Federal College Loans: Can payments be accelerated?
Old 11-05-2015, 06:51 PM   #1
Recycles dryer sheets
Tree-dweller's Avatar
Join Date: Jul 2011
Posts: 395
Federal College Loans: Can payments be accelerated?

Hopefully someone has already dealt with this. DW and I want to help out our daughter with her Federal Direct Unsub And Direct Plus grad school loans by making occasional additional payments, but I don't seem to be able to apply it to principal. I called the lender help desk, and the gist seemed to be that any additional payments went to interest, and pushed back the due date for the next payment. Is this right? Is there some way to get additional payments applied to principal only?

"The future's uncertain, and the end is always near. Let it roll, baby, roll." - The Doors
Tree-dweller is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Federal College Loans: Can payments be accelerated?
Old 11-05-2015, 08:03 PM   #2
Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: Laurel, MD
Posts: 4,227
Federal College Loans: Can payments be accelerated?

No, I don't think that's right at all. How can you make extra payments to interest? My daughter paid off one loan early by making extra principal payments. I showed her how to target the highest rate loan first. Maybe they meant payment of interest that was added to the loan balance before the payment period started. Once it is added to the balance its all the same. We paid off interest on the unsubsidized loans as we went. that I think about it, they may push the due date back to discourage early payoff but just keep making regular and occasional extra payments and as long as they accept the payments you should be good.

Sent from my iPhone using Early Retirement Forum

...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 11-05-2015, 11:17 PM   #3
Full time employment: Posting here.
Join Date: Mar 2008
Posts: 785
Any extra payments are split between current interest due interest and principle. Yes, the accounting they do on the loan treats them as early payments, so theoretically, your daughter could skip payments. But, if she continues to make regular payments, the loan will be paid off early. If you want to see all of your payment go to principle, make your payment the same day as your daughter. Her payment will first pay current interest due with the rest going to principle, and your payment will go to principle only. Now, if the loan was accruing interest while she was going to school, it most likely was capitalized and for accounting purposes, payments are applied to it first (after current interest due). The saving grace is that payments applied to accrued interest are deductible.
akck is offline   Reply With Quote
Old 11-06-2015, 04:06 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
target2019's Avatar
Join Date: Dec 2008
Posts: 5,072
Logging in to see what's going on will help. I do remember one child trying to pay down a higher rate loan by targeting more principal payment in that direction. But he was not able to do so. In his case extra payment was split equally. Eventually he grew tired of the payments and seriously attacked that for a tear and paid off entirely.

For other child, she was able to pay something more each month. I don't have the details.

I think it is possible that at different times and with different loan agencies you could see unexpected rules.

Best way? Take a pile of cash and pay the bloodsuckers off. Let her pay you back.
target2019 is offline   Reply With Quote
Old 11-07-2015, 05:01 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
Join Date: Mar 2005
Location: Chicago
Posts: 10,755
Originally Posted by target2019 View Post
Best way? Take a pile of cash and pay the bloodsuckers off. Let her pay you back.
I agree with this. Our godson's parents recently paid off his loan and he's paying them back (interest free, but that would be an optional act of generosity) over the next few years. I hope this doesn't create any family issues and so far, so good.

As far as being "bloodsuckers," I tend to cut most of the lenders a bit more slack. You don't have to take a loan from them. Most tax payers don't want increased taxes to pay for loan-needing kids to go to college or trade school. So, if you want to go, can't get a grant or a job that works in with school activities, at least there are loans available, even if you do have to pay them back.
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-07-2015, 08:06 PM   #6
Recycles dryer sheets
Join Date: Dec 2013
Posts: 331
I can't say with any certainty what is allowed now, but when I paid extra on my federal loans from 2004-2007 I was paying down principal. I think there was one month where the due date got pushed back, but it wasn't happening every time.

Sent from my iPhone using Early Retirement Forum

FI by 2024 is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
53 yrs old- Megacorp- Accelerated pension option? supernova72 Hi, I am... 10 03-26-2014 09:04 AM
$500k college loans, retirements to fund, still want to retire in 2016 in my 50's!!! tiredofworking2 Hi, I am... 5 09-23-2013 11:43 AM
LifeAccess Accelerated Benefit Rider soontobe Health and Early Retirement 0 06-29-2013 12:22 PM
First College Payments stephenandrew FIRE and Money 41 09-02-2010 09:19 PM
College Financial Scholarships For Later College Years yakers Other topics 1 05-18-2009 12:24 PM

» Quick Links

All times are GMT -6. The time now is 02:00 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.