Lotta debt here, trying to pay it off in the smartest way. The details:
Monthly interest builds: $1,350
PAYE amount due: $750
Monthly payments I'm able to make: $1,700
Thus far, I've gone ahead and spread out $1,350 of my $1,700 payments over each of the loans to pay off interest and a few extra bucks of principal, then I take the extra ~$350 and am putting that towards the highest interest loan.
Recently I was made aware that since I'm on a low payment plan that doesn't even cover interest on each of the loans, it might make more sense to pay the bare minimum required under PAYE for each loan, and then apply the ~$950 I'm able to pay all toward the principal of the highest interest loan. Although this means that about $600 of interest will build every month, there is no interest on interest and therefore I could come out ahead.
Does this new plan make sense, letting the interest build? I'm trying to figure out which is the best path before I have to actually fight with FedLoans on the phone about applying payments to the principal before the interest (since they default to interest-first and don't have a way to do it automatically... )
Monthly interest builds: $1,350
PAYE amount due: $750
Monthly payments I'm able to make: $1,700
Thus far, I've gone ahead and spread out $1,350 of my $1,700 payments over each of the loans to pay off interest and a few extra bucks of principal, then I take the extra ~$350 and am putting that towards the highest interest loan.
Recently I was made aware that since I'm on a low payment plan that doesn't even cover interest on each of the loans, it might make more sense to pay the bare minimum required under PAYE for each loan, and then apply the ~$950 I'm able to pay all toward the principal of the highest interest loan. Although this means that about $600 of interest will build every month, there is no interest on interest and therefore I could come out ahead.
Does this new plan make sense, letting the interest build? I'm trying to figure out which is the best path before I have to actually fight with FedLoans on the phone about applying payments to the principal before the interest (since they default to interest-first and don't have a way to do it automatically... )