Make Payments Right After Your Loan is Disbursed
If you took out more in student loans than you need, you can return the extra funds within 120 days of the disbursement date to save money on interest and origination fees.
Although payments aren't required until your loan is in repayment status, you are still able to make payments at any time. If you make a payment(s) within 120 days of the date the loan is disbursed to your school, your entire payment goes solely to the principal balance of your loan. The payment is treated as a loan cancellation payment, and it will be made effective the same date as when the loan was disbursed. Any origination fee you were assessed will be adjusted based on your new, reduced principal balance, and less interest will accrue based on a smaller principal balance. Please note that when viewing your online account history via Manage My Account (MMA), a loan cancellation payment will show an effective date that matches the loan's disbursement date.
Any payment you make will, per regulation, be applied first to outstanding interest, unless late fees* are assessed, then your principal balance. Interest accrues daily; therefore, the amount of unpaid accrued interest changes daily. Any amount paid above interest accrued and late fees (if applicable) will be automatically applied to the principal balance.
You can read more about simple daily interest accrual on our FAQ page.
*The U.S. Department of Education does not assess fees for late payment of Federal Direct Loans.
Add an Extra Amount to Your Payment
Add as little as $5.00 to your minimum payment each month, and you can shave off more than half a year on a $10,000 loan; an additional $10.00 each month could save you nearly $500 in interest on a $25,000 loan!*
Use our Loan Repayment Calculator to help estimate your potential repayment time and interest savings. An additional monthly payment amount may reduce the balance on your loan, which results in a reduction in the total amount of interest you will pay, allowing you to pay your loan off faster. Find the additional amount that works best for your budget by revising the “additional dollar amount” section in our repayment calculator.
Give it a try - see the difference a few dollars can make!
Try the Loan Repayment Calculator
* Above examples are based on a 120-month repayment term and a 6.8% interest rate.