CompoundInterestFan
Recycles dryer sheets
- Joined
- Jan 20, 2007
- Messages
- 222
So I just received the tax statement for my wife's student loan, and it turns out that I paid more in interest in 2007 than I did in 2006. It's a fixed-interest loan, and we didn't miss any payments, so I was pretty intrigued how that could happen. I did pay a little extra in 2007, but I assumed that was going towards the principal. Not so. I called the loan company, and after a lot of talking to supervisors and what not, someone finally offered the explanation that any payments beyond the minimum amount are applied to future payments, and so could go towards interest as well as principal. Huh? How does that work? That just seems illegal to me. Is this a common practice?
I'm currently paying online, and the only way I can make sure that extra payments are applied to the principal is to mail a check to a specific address the company has. Good grief.
I'm currently paying online, and the only way I can make sure that extra payments are applied to the principal is to mail a check to a specific address the company has. Good grief.