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Why Doesn’t My Student Loan Lender Apply My Extra Payments?

Written by Steve Rhode

“Dear Steve,

I have a question regarding paying extra on my student loans. I have three loans outstanding, with rates varying from 3.4% to 5.8%. I pay the minimum monthly, and am always in time. In fact, I try to be proactive and pay a little more on the loan with the higher interest rate. To my astonishment, I opened my account to pay my normal monthly balance and the system told me that I didn’t actually need to send a payment this month? I called and was told that all the overpayments that I applied to my account for that specific 5.8% loan are kept separate in an account “just in case” I fall behind in the future. The lady then told me that those overpayments weren’t automatically being applied to my principal? Why is that the case?



Dear Matt,

That kind of stuff is normally laid out in the terms and conditions. Some folks would sell that as a benefit, but it really just keeps your loan from getting paid off early.

And skipping a payment doesn’t really help you achieve your goal of paying the loans off early.

Call the lender back and ask how you can make sure your account applies all extra payments to the balance. They may require you to send in something in writing.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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