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I just reviewed the monthly statements of one of my student loans and was shocked to see that ALL of my monthly payments are going towards INTEREST only.
Info on the loan:
Current Amount of loan: $2,998.00
Interest Rate: 10.64% (I know, ludicrous)
Minimum Monthly Payment: $30.52
Loan Repayment: 10 years
Even with a high interest rate, shouldn't monthly payments be set so that they at least touch SOME of the principal? Sheesh, even $2?
My repayment length is supposed to be set at 10 years. How on earth would I pay it off at all if none of my payments are going towards...well, paying it off?
I absolutely plan on paying extra (just landed my first REAL job post-college), but it just doesn't seem right that loan companies can basically have you on an "interest-only" payment plan, without your consent. What a hamster-wheel!
Well, they want you paying as long as possible. Not really rocket science. My wife's loan company actually adjusted her payment downward at one point, "because she was doing such a good job paying it." We soon realized it would have taken 20 years on this new payment.
Depending on what loan it is, sometimes a student loan is interest heavy in the earlier years and then shifts to primary balance heavy in the later years. That is due to the fact that your loan might have accrued interest while you were in school. I would call them and discuss exactly what you can expect. Of course, I always recommend you pay more towards that loan then the minimum $30/10 year terms.
Are you sure what you posted is correct? How much $$ do you give them each month?
A $2,998 balance loan with a 10.64% interest rate accrues $26.58 in interest in a month. If your minimum payment is $30.52, you should be putting about $4 toward principal each month, so I'm not sure how what you claim works out.
Furthermore, if you want this loan paid off in 10 years, you need to put be paying $40.72 a month, or it's going to take you a very very long time!*
Finally, this is only a $3,000 loan - don't sign up for a 10-year plan. You wouldn't finance a car that costs 3X this amount for 10 years! Even if you paid the full $40.72/mo, you'll have paid $2K in interest on a 3K loan in a 10-year period. Not good.
* 20 years at only $30.52 /mo - absolutely ridiculous
I just reviewed the monthly statements of one of my student loans and was shocked to see that ALL of my monthly payments are going towards INTEREST only.
Info on the loan:
Current Amount of loan: $2,998.00
Interest Rate: 10.64% (I know, ludicrous)
Minimum Monthly Payment: $30.52
Loan Repayment: 10 years
Even with a high interest rate, shouldn't monthly payments be set so that they at least touch SOME of the principal? Sheesh, even $2?
My repayment length is supposed to be set at 10 years. How on earth would I pay it off at all if none of my payments are going towards...well, paying it off?
I absolutely plan on paying extra (just landed my first REAL job post-college), but it just doesn't seem right that loan companies can basically have you on an "interest-only" payment plan, without your consent. What a hamster-wheel!
They do have your consent. You gave it when you signed on the dotted line for the loan. Not their fault that you chose not to read the fine print.
Well, they want you paying as long as possible. Not really rocket science. My wife's loan company actually adjusted her payment downward at one point, "because she was doing such a good job paying it." We soon realized it would have taken 20 years on this new payment.
Just another reason why student loans suck.
Yes they do.......I thought about going back for a bachelor's but that's looking less likely. I try not to think too much about my loans, I'm just trying to pay them.
Did you not read the terms when signing up for this debt? This is where most of the big bad bank stories come from- not reading and asking questions before agreeing. You went to them asking to borrow money(application) they offered it to you on certain terms and you agreed by accepting it. There is no issue here except if you put on your blinders when it was time to get your loan and didn't read the terms.
All that being said if there is no prepayment penalty no big deal pay all you can regardless of minimum payment.
Are you sure what you posted is correct? How much $$ do you give them each month?
A $2,998 balance loan with a 10.64% interest rate accrues $26.58 in interest in a month. If your minimum payment is $30.52, you should be putting about $4 toward principal each month, so I'm not sure how what you claim works out.
Furthermore, if you want this loan paid off in 10 years, you need to put be paying $40.72 a month, or it's going to take you a very very long time!*
Finally, this is only a $3,000 loan - don't sign up for a 10-year plan. You wouldn't finance a car that costs 3X this amount for 10 years! Even if you paid the full $40.72/mo, you'll have paid $2K in interest on a 3K loan in a 10-year period. Not good.
* 20 years at only $30.52 /mo - absolutely ridiculous
Best response, hands down. A $3k loan is not bad even if your income is really low. Just pay as much as you can every month and you'll have it paid off in no time. The interest rate is high, but kudos to you for getting through school with only a $3k loan!
I had massive amounts of student loan debt. Many of the loans were about $3k, and I have been crushing one every month. At 10% interest, I would throw everything you've got at that loan. Since you have a decent paying job now, use the extra money to obliterate this debt before lifestyle inflation kicks in. Too many people fall into that trap. You will thank yourself in the long run.
Now, I don't know your financial situation, but I'm willing to bet you could be done with this loan in 3 months if you really wanted to.
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