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Private Loan Payoff, Repayment Strategery

December 10th, 2018 at 12:08 pm

Still here, still bad at posting regularly! Life is busy but good. Financial updates:

Been putting a big chunk of each paycheck toward my only private loan, and I mailed a check for the final payoff balance on Saturday! It usually takes at least a week for payments to show up. Looking forward to getting down to one loan servicer to deal with! Very grateful for the private loan though- they offered much lower interest during the years while I was still in school.


Payment for a side project came through, $685 after taxes. I sent this to my federal loans as an extra payment, but it’s also a test to see if my payoff strategy will work. With the federal loans I have a big balance and a lot of interest accumulated in one “account,” but it’s actually made up of multiple smaller loans taken out at different times. Any extra payment is applied to interest first, so I’m really hoping if I designate it to go to a certain loan within the account (loan #1) that means that once the interest on only loan #1 is covered, it starts hitting principle. This will make a HUGE different in how long it will take and how much total interest I’ll pay.

My goal is to eventually refinance (6.55% is insane), but I’m reluctant to lose the federal protections and IBR option until I’ve been at my job for at least year and find out for sure they plan to renew my contract. If I have to pay ALL the accumulated interest on the federal loans before the principle starts to go down, may need to rethink that plan. So far based on some preliminary research it looks like rates as low as 4% would be possible.

4 Responses to “Private Loan Payoff, Repayment Strategery”

  1. homebody Says:

    It's funny to think our original mortgage was at over 7% in 1987!

  2. CB in the City Says:

    Congrats on paying off the private loan!

  3. Greenleaf Says:

    Homebody- wow, I sympathize!

  4. Smallsteps Says:

    Your plan for payoff does work that is how I did my loans.
    I was always curious as to why people kept saying it all went to interest but if they apply to all loans it takes a lot longer. I am actually surprised as my loan servicer did the snowball method from the beginning.

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