need help understanding interest and extra payments

[mcampbell14]

Im not sure if this is the best place to post this so if it needs to be moved it can be. I currently have roughly $25,000 in student loans averaging about 4% interest. I am in a graduated payment plan so that my payments start low ($150) and then increase overtime. I chose this plan so I could specifically pay more (extra $200) on the higher interest loans. However, myfedloan (my loan servicer) makes it very difficult to pay extra directly to principal. Can someone help me understand why it is worth my efforts to call in each month or send a check insuring the extra goes to principal? It is very easy to make another payment that will go some to interest and some to principal. A math example would be extrememly helpful to show the difference between the two scenarios as well. Thanks in advance!

[SCF]

Do your minimum payments cover all of the interest that accrues each month?  I'm not sure if the graduated repayment plan can set your payment lower than an "interest-only" payment, but if you are paying less than the total interest with your first monthly payment, it is probably a good idea to let some of your second payment be applied to interest so that you don't have outstanding interest building up until your minimum payment increases.  They may capitalize that interest at some point, and then you would effectively be paying interest on your interest, which is definitely more expensive than simply keeping it paid up if you can afford to.

[mcampbell14]

The minimum payments for each loan completely cover the interest and a small portion of the principal balance. However I don't know how to calculate the difference in cost between making extra payments specifically do the principal vs a general payment towards the loan which pays interest first.