Student loan Q-forwarding overpayment

iVillage Member
Registered: 03-07-2005
Student loan Q-forwarding overpayment
7
Thu, 03-23-2006 - 10:22am
This may sound stupid but if I make a big enough payment to cover both a full month's payment AND the next month's payment they will forward the due date. Meaning next month I don't have a payment due. What's in it for them on this? And it also says that any overpayment is automatically credited toward the principal balance provided that all interest, late fees, etc are covered first. Does all this make sense? I'm just wondering if the overpayment is credited toward principal then how can they 'skip' the next month's payment. I mean I wonder if the 'skipping' a month deal supercedes the payment to principal so that the extra $$ doesn't go toward the principal, kwim? Do you think I should call to clarify that I want ALL overpayments credited toward principal and that I DO NOT want to 'skip' any payments. Guess I should make the call. I'm confused and normally I can follow all of this info. I'm just always skeptical of loans skipping a due date since I know it can't be in my best interest. TIA
Avatar for 2locachicas
iVillage Member
Registered: 05-14-2003
Thu, 03-23-2006 - 10:33am
I asked the same question not so long ago. If you make a principal payment less than the amount of a full payment it posts to principal but if it is more then it getts paid forward...
iVillage Member
Registered: 03-27-2003
Thu, 03-23-2006 - 10:46am

You can also just write "Apply extra to principal" in the "For" line and they are required by law to do so. Saves a phone call and the wondering! But go ahead and make that call for past paymets to set your mind at ease. :)

Blessings,

Heather

Avatar for 2locachicas
iVillage Member
Registered: 05-14-2003
Thu, 03-23-2006 - 11:09am
You can do that but personally I pay mine online and I can't do that. i have started mailing in the principal payment and hopefully that will help...it hasn'tbeena month yet. I still marvel that they would finance 4,000 for 20 years!!
iVillage Member
Registered: 03-07-2005
Thu, 03-23-2006 - 12:38pm

I still marvel that they would finance 4,000 for 20 years!!

Sad thing is that some people take that long....I sure wish my were only $4,000--mine are so much more. I also pay mine online. I guess I should call just to set the record straight. Man, I can't wait to have mine paid off. I'm really going to work on it this year and not with the half a** commitment I usually make. THanks to all.

Avatar for endomagazine
iVillage Member
Registered: 11-09-2004
Fri, 03-24-2006 - 9:38pm

Hello,

Regarding "what's in it for them" when they post your payment "forward", you are still charged interest on the principal for this month. By moving your payment "forward", your interest charges are not any lower than they normally would be if you paid the minimum required. If they post the payment to principal *immediately*, then the overall balance is lower, meaning that they get less interest payments from you.

I would suggest calling to make sure that your payments are applied to principal immediately. After all, these "snowball" payments are meant to speed up the debt repayment!

Sincerely,
Lindsey Schocke

Sincerely,
Lindsey Schocke

Geeks on Tap: Mission Accomplished

iVillage Member
Registered: 03-07-2005
Sat, 03-25-2006 - 10:44am

By moving your payment "forward", your interest charges are not any lower than they normally would be if you paid the minimum required. If they post the payment to principal *immediately*, then the overall balance is lower, meaning that they get less interest payments from you.

Yes, that's what I suspected. How very clever of them so in essence the 'skipping' the due date deal does supercede the 'applied to principal deal'--that's what I figured. I wonder how they can get away with that. Grr...you know when they talk about BK reform, CC reform, etc that should really include rules for lenders too. But I suppose when you borrow it's all in the fine print. Stupid fine print. ;) Guess I'll be calling them to make myself LOUD AND CLEAR! Thanks.

iVillage Member
Registered: 11-03-2003
Sat, 03-25-2006 - 7:20pm

Hi,

I do the same thing....pay more than the monthly payment. My particular student loan company (AES) requires that you send written notification if you want the extra $$ to go toward principal. Otherwise, it gets paid forward. So I send a letter and a check every month, even though I pay all my other bills online. Grr. I hate doing that, but the customer service reps are in India (pretty much worthless) and the payment processing is in the US.

Hope this helps.