Student Loan Prepayment

Student Loan Prepayment

If you choose to make extra payments on your student loans, you can reduce the interest that accrues on your outstanding balance and reduce the overall amount you’ll pay on your loan — without penalties. Just like regular payments, all prepayments are processed through your student loan servicer(s).

To find your servicer, visit the National Student Loan Data System at

Your servicer will apply your payments toward any outstanding charges, collection costs, fees and interest before applying funds to the outstanding principal. Once those costs are covered, you can choose to have your prepayment applied evenly across all loans (if you have more than one), or have the entire amount dedicated to one loan.

  • Consider the benefit of targeting prepayments to the principal of your most expensive loan first (typically, those with the highest interest rates).
  • Be strategic. Unless you offer specific direction, your prepayment will be applied to your future monthly payments and will not automatically pay down your principal.

If you’d like to prepay your loans, contact your servicer and ask questions such as:

  • What is the current outstanding balance of my loan? (This is particularly important if you are making a lump sum prepayment.)
  • Can I include a prepayment with my regular monthly payment, or should I send it as a separate payment?
  • Where and how do I add a message to specify how my prepayment should be applied?

Check back with your federal student loan servicer in a week or so to ensure the prepayment was applied correctly, and follow up with your servicer promptly if you need to correct any prepayment issues. Keep records of all of your communications with your servicer and any prepayments you make.