05-06-2011 06:04 AM
I've been trying to pay down my Sallie Mae loan with essentially double payments - right around the first of the month (my payments are due on the 3rd), I put in an additional payment. My scheduled payment is $57.25 (ACH) and I double it and then round up, so I make an additional payment of $57.75 just prior to the due date.
The effect of this has been to push my next due date out further and further - not to pay down the principal, so I emailed to ask them specifically to fix this. Here's what I got back:
Thank you for your business.
Your account has been adjusted to show your next payment of $57.25 will be due on June 3, 2011.
Once you are enrolled in the Auto Debit Program, your bank account will be debited, once each month, on your scheduled due date, even if your account is paid ahead.
All payments, including extra payments, are applied first to interest. The remainder is applied to principal.
However, if a payment is received that is equal to two or more monthly payments; the payment date is also advanced by the number of full payments received. This is required by federal regulations. If you do not wish to have this happen, please send an email or letter with EACH payment, specifically stating not to apply the payment to future months.
If you are submitting a payment online via Manage Your Loans that is equal to two or more monthly payments, you will be directed to a page where you can choose if the payment is to be used as 1) a prepayment of principal or 2) to pay your account ahead.
If your extra payment does not equal a whole payment, it will automatically be applied to the principal balance if all of the accrued interest has been paid.
So - if you are making an extra payment that is at least the normal monthly payment near your due date, it will go to advance your next due date automatically and will NOT pay down your principal. If I want to pay extra and be prompted for what to do with it, I would have to pay an *additional* two payments to be prompted to apply it towards my principal, so I'd be paying $57.25 via my ACH plus at least $114.50 to be prompted as to whether I want it applied to my principal or to push my next due date out (btw, pushing the due date out doesn't change that I'll have an ACH drafted on the 3rd of the month). I'm starting to think that what is the simplest thing to do is to start making extra payments just shy of the regular payment. It just seems silly to have to specifically send an email with each payment with instructions and that it isn't built in to ask me. Glad to know how to get around it, though.
05-06-2011 07:52 AM
That seems pretty stupid. But I'm a bit confused. First off, how much interest do you owe? Is it possible (especually if the loan has been deffered) that you owe a few hundred in interest, and its going to take a few months to pay the interst off.
At least from my reading, if you pay twice what you owe, another payment won't be due for 2 months, but if you have paid off the interest, then I woudl think the extra has to go to principal.
When I first started paying off my student loans, I owed around 500.00 in interest, so it took a few months to pay that off, so the principal didn't move.
Also, Sallie may is stating they are required by law to push the autopayment back when you make a larger payment, I know that not all lenders do this. I have great lakes, and I pay 250 on my own, early in the month, and on the 28th, they still take out an autopay of 68.00. My payment does not postpone the autopay (which is fine since I want to pay about 300 a month on the loan.)
05-06-2011 08:22 AM
Since they adjusted my account (they had pushed back next due date to January 2012) to reflect the June 3rd due date, I checked and I currently owe about $2.83 in interest. I believe that if I pay them $57.25 right now, it would automatically advance my next due date to July 3rd. I'm more likely to make paying down principal part of my payday routine than to email them every single time I want to pay down principal - I'll probably just pay half the advance amount I want to pay every two weeks (like $29 - heck, round it to $30) and have it automatically go towards reducing my principal without typing out the email.
05-06-2011 08:23 AM - edited 05-06-2011 08:25 AM
Oh, and my autopay isn't postponed - autopay has been happening, but the next due date has been advancing. Like, the same amount comes out on the 3rd of every single month, but the due date gets postponed another month so I'm paying ahead with the autopay.