A number of recent graduates have asked us: why is my student loan interest rate so high? And how can I more quickly pay off this loan?
Often borrowers have several loans at different interest rates. If you’re looking to reduce the amount of interest you pay each month, you’ll want to look into whether you can refinance your student loans – but there are relatively few options out there. Another option is to make extra payments toward your loans, which can save you a lot of money, especially when you direct those payments toward the individual loan with the highest interest rate.
However, many of you have told us about problems you face when trying to tell your student loan servicer what to do with your extra payments. Some of you also have told us that you’ve had a hard time getting a straight answer about these payment processing policies.
What advice would you give to borrowers just beginning to repay their loans? What worked and what didn’t work? Be sure to include the tag “student loan” with your story. Your story can help us build better tools for student loan borrowers and help borrowers that run into trouble.
For example, some of you have told us that you provide instructions in the “memo” field of your check or through an online “bill pay” service. You’ve also told us that you’ve called your student loan servicer in advance to let them know that your employer might be making a payment on your behalf and you want the payment applied in a certain way. Sometimes this works and sometimes this doesn’t.
We’ve also asked student loan servicers to tell us about their policies for handling extra payments, so that we can keep building tools to help you tackle your debt more quickly. And as a reminder, it is unlawful for student loan servicers to charge you penalties or fees for prepaying your student loan.
We look forward to hearing from you!