What is an interest credit?
I have been paying a Sallie Mae loan for seven years and realized in September that I had only paid down $900 on a $8500 private education loan. After realizing this I started paying triple the monthly amount I have been paying for the last seven years. Rather than applying the additional funds to the principal balance, I received something called an interest credit, something Sallie Mae/ Naviant says they cannot apply to the balance after payments are applied. In the future I must send a letter with payments over the minimum payment due indicating I want it applied to the principal.
The Student loan works just like a mortgage.
The initial mortgage may only be for $100,000 but after you pay it off 30 years later you end up paying a total of $220,000 or $120,000 in interest. Yes, student loans are just like mortgage a TRILLION DOLLAR business, very profitable!!!
So in the end you did the right thing, just like a mortgage payment if you want to apply extra money to principle you have to communicate that upfront before making the payment.
The truth is they hate when you over pay!!!! So great job tripling your payments, they really hate you!!!
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