Student loan due dates far in the future

Mongrel Idiot

Hello, H&A. Last month, my wife and I had an unexpected and very large bill slam us, so I turned off the autopay on both of our student loans so I could just pay the minimum until we clear this other bill. When I look at the two loan pages, neither lists a due date that makes sense to me. Mine says that the next payment isn't due until 2018, and hers is a little unclear but I think it's not due until next month. I've been paying more than the minimums on both loans for some time; before we were married, I was paying far above the minimum on mine.

My guess is that by paying more than I had to I got ahead of things and now can pay more or less whatever I want, but that doesn't feel like the way loans work. Could I actually just sit on my ass not paying until 2018 if I wanted to? Obviously that's a bad idea, but does it really mean that I can more or less set my terms for the time being? I can't find anything on their FAQs, and I don't believe I can call until Monday.

bowen

Depending on the lender, that could be true. That was true when I was paying my car if I paid extra, and my federal student loans. My private student loans were another matter entirely.

Mongrel Idiot

Oh, cool. They're both federal student loans. I should probably call them to confirm it anyway, but definitely good to know it's not unheard of. Thanks!

see317

Yeah, this depends entirely on the lender.

If your lender applies the extra to the principle immediately, that's a great way to pay the loan down quicker. Your principle goes down, which means the amount of interest that is charged goes down which means you can pay even more to the principle next time.

What it sounds like is your lender is applying the extra to the next payment, which sucks because that doesn't work the principle down, which means it's still accruing the normal amount of interest.

When you call them, see what it you need to do to get the extra applied to the principle, otherwise you're not doing shit to pay it off quicker by overpaying, since the lender isn't applying your payments until they come due.

Mongrel Idiot

Hmm. I looked back at some months last year where I made an extra payment on top of the auto-payment, and according to their website it was split between interest and principal. That was for my loan, though: my wife's lender's site is a lot more confusing.

Edit: Found the same kind of page on her lender's site. They seem to split stuff between interest and principal, too.

AspectVoid

Yeah, back when I had student loans, I had the option to overpay, and then apply the overpay to either the principal or the next payment. Applying to the principal reduces the overall amount you'll pay on it, but by applying it to the next payment, you're covered in case of an emergency since you'll get ahead on payments.

Aioua

I did this with my school loan through sallie mae and they took extra and applied it both to principal and considered it to have fulfilled future payments.

It's weird because that's the most beneficial for the consumer but I assume there was some law that made them do it that way.

Mongrel, it sounds like your lenders are doing that same thing. If they were playing the game of just holding the funds for the next payment you wouldn't see the interest/principal split, it'd be marked as something else entirely.

Mongrel Idiot

Aioua wrote: »

It's weird because that's the most beneficial for the consumer but I assume there was some law that made them do it that way.

That was my exact thought when I saw it: this can't be the case, because why would they do the thing that's best for me? That doesn't sound like how loans work!

Thanks for the input, everyone. I completely forgot to call today, but it sound like I'm generally not crazy, at least.

schuss

Mongrel Idiot wrote: »

Aioua wrote: »

It's weird because that's the most beneficial for the consumer but I assume there was some law that made them do it that way.

That was my exact thought when I saw it: this can't be the case, because why would they do the thing that's best for me? That doesn't sound like how loans work!

Thanks for the input, everyone. I completely forgot to call today, but it sound like I'm generally not crazy, at least.

If they're federal, it wouldn't surprise me, as the program is designed to enable your college attendance, not make money.

Daenris

Aioua wrote: »

I did this with my school loan through sallie mae and they took extra and applied it both to principal and considered it to have fulfilled future payments.

It's weird because that's the most beneficial for the consumer but I assume there was some law that made them do it that way.

Mongrel, it sounds like your lenders are doing that same thing. If they were playing the game of just holding the funds for the next payment you wouldn't see the interest/principal split, it'd be marked as something else entirely.

Yeah, I can confirm that Sallie Mae did this for me even on private loans. I was going through a period of deferment because I went back to school, but I kept paying enough to cover the interest and a bit more. When my in-school deferment ended, the loans were updated to indicate they were in repayment again, but I didn't have any payments due for awhile because of what I'd been paying through the deferment, on both federal and private loans. I was definitely surprised they did that.

Edit: To be clear, I was suggesting my over payments were going both to principal as indicated by reduction of my principal on my monthly statements, as well as going towards future payments.

mts

well often you need to specifically state that overpay should go towards the principal, otherwise it goes to the next payment