IBR Repayment Question

[Trastuz]

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If I were to pay more than the minimum monthly payment in IBR, am I allowed to choose which loans to apply the amount in excess to? I have read the FAQs on studentaid.ed.gov and there it says that I can't choose between applying payments to subsidized/unsubsidized loans; that payments are distributed equally among lendors. However, all my loans originate from the same lendor and all are subsidized. The details of my particular situation are long, unique and unimportant. But does anyone know if this is allowed? I simply want to apply my extra $ to the loan with the highest interest rate (assume I can pay for any accrued interest first).

 

[ryan6285]

You can choose which loan to pay down after your monthly payment is made. One feature of IBR though is that any unpaid interest on subsidized loans is paid by the program on your behalf for the first three years of IBR. That means even if your IBR payment doesn't pay down the interest for you, the program itself should and any further payments during the month should theoretically be going straight towards the principal. However I'm not sure exactly the timing of the interest being paid by the government for you in relation to your extra payment.

 

[Trastuz]

Thanks Ryan, very helpful. The interest accrued is only paid by the program if it is not covered by the minimum monthly payment, right? Fortunately, my loan amount is pretty low so I'm guessing my payment will cover the interest and pay down some of the principle each month.

Corollary question: if I pay down a large portion of the principle, will it affect (reduce) my minimum monthly payment or will it continue to be the same?