Question about having multiple loans and overpaying to pay them off

[Lem0nz]

Hello, kind of a specific question I can't find an answer to (have an email out to fed loan but thought I'd also ask here)

If you have multiple loans from different time periods in your life from fed loans, all the same servicer, do you have to pay the interest on ALL of the loans before you can pay principal on them? Or do you only have to pay down the outstanding interest on the loan you want to pay off before you can pay towards the principal?

Situation is that I did a masters degree in 2017-2019 with ~30k debt while I was in residency. My med school loans are ~210k. After residency/fellowship I am on track to get PSLF for the med school loans though and have a job at a nonprofit and meet all other criteria in about three years, however, I really doubt at my income level that I'll get PSLF on the masters program which I will only have two years PSLF credit for and I just want to pay off those two sets of loans from 2017 and 2018. That said, the outstanding interest on *everything* is 35k so if I have to pay 35k in interest to be able to get to the 30k principal on the masters it makes way more sense to just wait for PSLF to kick in on the med student loans and then circle back to the masters in 3 years.

Would rather pay off debt though if able on the masters.

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[RangerBob]

You can selectively apply your additional payments—but you have to actually specify it. FedLoan let’s you do it online when you apply an additional payment.

 

[Neopolymath]

You can selectively apply your additional payments—but you have to actually specify it. FedLoan let’s you do it online when you apply an additional payment.

To piggyback on this, you absolutely need to specify and then VERIFY. These people will say one thing and you think you have an understanding of the order and then you read the statement and wonder if they were even listening.

 

[Lem0nz]

Yes definitely, thank you. I found that part to target payments in fed loan servicing before I came here. But my question is a little more specific - if I use that tool to target a loan and pay on that loan, do I have to first pay the outstanding interest on *all nine* of my loans to get to the principal of the single loan I want to pay off, or do I only need to pay the outstanding interest on that single loan?

The information I've been able to find doesn't deal with multiple loan scenarios. It just says that all additional payments above your monthly payment are first targeted at outstanding interest. My interpretation of this is that it probably means if I have 8000 in loan 9 and 500 outstanding interest on loan 9 that if I do a targeted payment like you suggested using that tool than I would pay off loan 9 and be left with the other 8 loans still. What I definitely don't want to happen though is that I pay 8500 and it instead just gets applied to the total outstanding interest which is 30k and I can't even get at the principal for any of my loans.

 

[Neopolymath]

Yes definitely, thank you. I found that part to target payments in fed loan servicing before I came here. But my question is a little more specific - if I use that tool to target a loan and pay on that loan, do I have to first pay the outstanding interest on *all nine* of my loans to get to the principal of the single loan I want to pay off, or do I only need to pay the outstanding interest on that single loan?

The information I've been able to find doesn't deal with multiple loan scenarios. It just says that all additional payments above your monthly payment are first targeted at outstanding interest. My interpretation of this is that it probably means if I have 8000 in loan 9 and 500 outstanding interest on loan 9 that if I do a targeted payment like you suggested using that tool than I would pay off loan 9 and be left with the other 8 loans still. What I definitely don't want to happen though is that I pay 8500 and it instead just gets applied to the total outstanding interest which is 30k and I can't even get at the principal for any of my loans.

I think this depends on if you have these loans under the same account or if they are under different accounts. That's what I gathered when reading on this earlier this year. It might be in WCI or Ben White's great loan posts. I'll see if I can find something directly.

 

[Lem0nz]

Same loan servicer, same account. Different loan numbers from different schools.

Edit: Though, this looks super promising. When I went to the loan payoff section to pay a loan in full, you select a specific loan (one of the nine), a payment date, and then request a payoff amount. It then gave me a payoff amount that was the individual loan + the individual loan's interest and asked for a bank account to pay off that specific loan with a make a payoff payment button. So I think I can do it right here and may have lucked onto my answer.

 

[Lem0nz]

Personal information removed. Seems like exactly what I'm looking for, yea?

 

[dpmd]

It looks like it should be applied that way. I looked at their FAQ and it seems they treat each account separately for targeted extra payment purposes