student loans: anyone have this happen?

[snowy76]

I just checked the account for DH's student loans. We were having payments taken out of our checking account every month. Today I suddenly noticed the loan company had lowered the monthly payment by $40. We did not ask for a lower amount; if anything, our goal is to start paying over the monthly amount to get this loan paid off. It's our biggest debt at $14K.

Anyone have this happen to them? DH plans to call them and ask for the payment amount to be brought back to what it had been. I know some people would be excited at having a lower bill but I suspect they're doing this to extend the life of the loan and get more interest money out of us. And we do NOT want that!

 

[trip]

This has happened to my DD loans. There probably was a change in the interest rate. Usually we receive advance notice.

 

[prncess674]

Student loans have some of the lowest interest rates and in many situations the interest is tax deductible. If you have other debts such as credit cards or car loans pay the absolute minimum on the student loans and attack the other loans before attacking the student loans.

 

[snowy76]

See, that's where this got weird, and why I posted. The interest rate did NOT change. It has always been ridiculously low, actually, and it's fixed.

So I'm wondering, with so many people defaulting on various loans, are these companies looking for income wherever they can? By lowering our monthly payment (from $155 per month to $110), it would take us longer to pay off the loan and they would earn more money in interest, wouldn't they?

 

[EthansMom]

After DH had consolidated his student loans, the payment would usually reamortized once a year, often coinciding with an interest rate change. But even if the interest rate didn't change, when the reamortization took place, his minimum payment would decrease because we paid extra towards the principal when we could.

 

[DISdreamin']

For me, after so many on-time payments my interest rate was lowered, even though it was a fixed-rate loan. I know my payment did change at that time, but my payoff period stayed the same.

And on a related note - WOO-HOO! to paying off student loans! Make them take that money! Get rid of that sucker...mine has been hanging around darn-near forever, and I'll finally kill it in July.

 

[DisneyDebbie]

When I was still paying my student loan, it went down a little ($7-$10) every year. It was a fixed rate but I think because the principal balance went down, so did the monthly interest charge. I know they can't extend your payment time frame if you signed a certain years payment agreement.

I do agree that the interest you pay is tax deductible, so you should pay off cc and car loans first.

 

[snowy76]

his minimum payment would decrease because we paid extra towards the principal when we could.

We were planning to do that, but haven't actually done it yet. But boy am I motivated to start, just to get this out from under us! At the amount they're asking per month, we'd be paying until my youngest DS starts applying for colleges himself! Luckily we started "snowballing" with our debts after Xmas, and on this pace we'll pay everything off within 2 years. I just think it's a bit sneaky of the loan company - I'll bet there are quite a few people on automatic payments who might not notice right away that their monthly amount dropped, and/or not realize that it's going to extend the life of the loan.

 

[prncess674]

And on a related note - WOO-HOO! to paying off student loans! Make them take that money! Get rid of that sucker...mine has been hanging around darn-near forever, and I'll finally kill it in July.

Hopefully you have paid off all other debt before attacking this super low interest and tax deductible student loan.

 

[patsal]

You do not need to have them change the amount you pay to the higher amount. When you pay the bill each month just add however much you want to it. My grad student loan is about $75. per month, I pay $100-200 per month--I have no payments owed for over two years, but still pay every month. I am only paying the extra because all other bills are paid off and I can't see dragging it on for longer than I have to . DH has a $50 payment and I am in no hurry to get rid of his--when I get done with mine I'll just add what I'd been paying for mine to his payment.
His is really small though, it is the cost of one course versus the cost of the whole Mater's for me. His work reimbursed for all courses, just not books and we had to "front" the money and then be reimbursed course by course.

 

[Ava]

That hasn't happened to me, but I have my student loan set up to automatically pay the minimum payment each month. Part of the direct debit agreement I signed said that if the minimum payment changes, the amount the direct debit each month will change accordingly. I'm totally fine with that, one less thing for me to keep track of! I was paying over the minimum for a while, but now we're down to one income so I cut it back to just the minimum again. If I ever have some extra money to throw at it, I can always just make an extra payment. I still have about 10k left on this sucker, and have no other debt, but the interest rate is so low (and tax deductible) that I'm okay with just paying the minimum for now.

 

[snowy76]

You do not need to have them change the amount you pay to the higher amount. When you pay the bill each month just add however much you want to it.

We have automatic payments, so we'll have to contact them unless we want the hassle of sending a 2nd separate payment each month.

Ava's comment about the minimum payment changing makes sense. As this was DH's loan from before we were married, I don't know all the terms of the loan (and he is not one in charge of finances, so he wouldn't know either LOL).

Since this payment has been steady since before I married DH six years ago... and with all the stories I've been reading about people's CC terms changing lately ... it seemed to me like maybe some of the student lenders are changing things up as well.

 

[branv]

As one person stated, you may have been rewarded for making ontime payments:

One of my student loans lowered the interest rate after 36 months of on time payments. But one of them lowers the actual BALANCE a certain percent -- at 12 months, 24 months and 36 months of on time payments. Check your balance, compare it to the amount applied to the principle after your last payment and see if it went down more than that amount. That's the only way I found out mine went down, I had no notification from them. Nice surprise

I agree with a PP -- I wouldn't ask them to raise the required payment, I'd just pay over the amount as planned. The plus side of that is if you get into a financial bind like unexpected bills or income loss, you still have the option of returning to the lower minimum payment. You may be able to call them and arrange the automatic draft to include your extra payment without raising the minimum due.