My wife is a school teacher and she has about 20k left on her school loans. I'd say the average interest of her loans is 6 - 7%. We have the funds to pay it off. In another year she'll be eligible for 5k to be paid off on her loan through the teacher loan forgiveness program. We were thinking of knocking down as much as we can now without paying it all off to use the 5k she'd be eligible for. Just looking for thoughts on how we should handle this. Say we pay 15k now, would the loan still be required to pay a monthly amount which would say take it under 5k and then not be able to fully use the program money? The loan is thru Nelnet if that matters. Thoughts?
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Senior Member - 10K
posted: Jul. 23, 2016 @ 2:01p
AFAIK, any payments you make will go towards principle, which will lower the amount owed and hence let you save on interest paid. Sometimes you can make future payments, but don't see the point.
But you will still be required to pay your monthly amount.
posted: Jul. 23, 2016 @ 3:51p
It's quite possible that the amount you pay each month will stay the same (like a car payment). Not go down like when you pay down a credit card.
You can ask for a loan modification to modify your monthly payment but there could be fees. I might just pay $10k-12k and continue paying monthly for a year.
posted: Jul. 23, 2016 @ 8:08p
myfrogger said: It's quite possible that the amount you pay each month will stay the same (like a car payment). Not go down like when you pay down a credit card.
You can ask for a loan modification to modify your monthly payment but there could be fees. I might just pay $10k-12k and continue paying monthly for a year. Th only way monthly payments go down is if you payoff an individual loan -- assuming there remote than one.
posted: Jul. 23, 2016 @ 11:03p
I have loans with Nelnet. When you make a payment, you can choose whether or not your due date advances if the payment exceeds the required payment.
Senior Member - 1K
posted: Jul. 23, 2016 @ 11:22p
Be sure you evaluate your potential tax strategy. Will the forgiveness count as income (and also as payment)? I'd probably leave a $7,500 balance so you can max out the adjustment on your taxes next year, too.
posted: Jul. 24, 2016 @ 7:02a
unimeg said: I have loans with Nelnet. When you make a payment, you can choose whether or not your due date advances if the payment exceeds the required payment. I saw no reason to not advance the due date.
Whichever option you select has the same impact on your loan balance; the only difference is when they expect the next payment.
If you advance the due date, you are less likely to ever have a late payment.
FYI -- Nelnet also allows you to select which loan(s) your payment should be applied to if you have multiple loans.
posted: Jul. 24, 2016 @ 7:40a
You are going to have to call your loan servicer and ask how they handle pre-payments. They'll probably do whatever you tell them you want them to do.
posted: Jul. 24, 2016 @ 8:43a
Pay half ($10000) now, continue to make payments for a year, get the $5000 forgiven, and then pay whatever the balance due is.
posted: Jul. 24, 2016 @ 9:52a
clangle said: Pay half ($10000) now, continue to make payments for a year, get the $5000 forgiven, and then pay whatever the balance due is. Right and that would save you $600 interest in the upcoming year.
posted: Jul. 24, 2016 @ 3:31p
Pay off the highest interest loans first until your down to around $5050 balance.
Senior Member - 1K
posted: Jul. 25, 2016 @ 9:24a
As others have stated, this will depend on your servicer. Some allow you to choose how payments are applied.
posted: Jul. 25, 2016 @ 11:56a
If a large portion of that balance is accumulated interest, be sure to look into how much you can deduct on your taxes in a year (I don't remember the details but I made a mistake on that where I would've been better off overall waiting to pay off than paying all at once like I did)
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