What You Need to Know About Paying More Than the Minimum Payment

Paying more than the minimum payments

When I was 22 I landed my first “real job” after college. I was making more than the $2.33 an hour plus tips I had made at all of my waitressing jobs, and it felt great to have a stable income for the first time. I was just starting out, and I wanted to do it right. While I knew very little about my student loans at this point, I had heard so many times that the best way to pay off student loans was by paying more than the minimum payment. So that’s what I did – at least for a few months.

Little did I know, I was falling into a trap.

I owed about $52,000 to one of my student loan companies. My minimum payment each month with them was $267. For the first few months in 2011, I increased my bank draft to $300 a month, which was $33 dollars extra each month towards this balance. I felt great about paying more than the minimum payment and thought I was doing the right thing.

After 8 months of paying extra, I went back to making just the minimum payment. I guess you could say I was no longer motivated to pay these people more than I had to. This was me being completely naive – I didn’t realize at the time how much more you pay by just making the minimum payment, but I digress. 

About 2 and a half years later, I called in to make a payment. I spoke to someone who told me extremely upsetting news. The extra money I had paid in 2011 had been spread out across each individual loan and payments weren’t being applied until that amount could fulfill a minimum payment.

I had five separate loans with this one company. Each loan has its own minimum payment amount, accrued its own interest, etc.

Here’s the catch – the student loan company would only apply that extra payment once it was enough to make a minimum payment for that specific loan.

The chart below may help explain this better. The last column shows the amount of my extra $33 that went towards each loan every month.


Loan # Loan Amount Min. Payment Extra paid each month
1 $17,391.95 $88.13 $10.32
2 $5,930.55 $30.03 $4.25
3 $4,492.77 $22.84 $3.78
4 $16,323.42 $81.00 $9.32
5 $7845.12 $48.00 $5.33

When that last column was finally enough to make the minimum payment on a loan is when they would apply another payment to that specific loan. So for the loan #1 the minimum payment is $88.13, but after 8 months of making payments, the extra amount was only $82.56. Since it wasn’t enough to meet the minimum payment, that money just sat there. For 2 and a half years it sat there – in the student loan company’s banks accruing interest for them, and leaving me in the dust.

The woman on the phone explained that even after 7 or 8 months of making extra payments, none of that money had been applied to my loans because it had not grown big enough to satisfy the “minimum payment” amount on any of the loans.

I was so frustrated, angry, and upset that no one had ever explained this to me this before. I felt so dumb, naive and completely out of touch with reality. None of my loan statements made any of this clear and none of the other people I had spoken to had felt they should divulge this information.

I realize that this only equates to about $264, but that was a $264 payment that could have saved me interest payments over 2.5 years. It just felt like a complete stab in the back. Here I was, this 22-year-old trying to do right and pay back my student loans in less than 30 years, and the loan company was playing tricks on me.

I was so frustrated. NEVER…AGAIN!

This phone call happened right around the time I had been listening to financial podcasts, and the call put the nail in the coffin.

NEVER AGAIN would I let myself be betrayed by these people. NEVER AGAIN was I going to let other people decide my future and what happened with my hard earned money. I was going to figure out what was going on and get out of their grasp as soon as possible.

A few months later and here I am, writing this blog in hopes of reaching the people who didn’t have this breakthrough yet. Student loan companies are not honest, they are not up front, and they are not here to help us get out of debt. They want us to stay in debt and earn them more interest.

So I want to thank you, student loan company from South Carolina with an apple in your logo, for screwing me, and for starting this never-ending motivation I now have to get out of debt. Thank you, for getting so far under my skin that I created this website to help make sure other people don’t fall for your tricks.  I have lowered my student loan jail sentence to 36 months and I cannot wait to get rid of you.

So what is the best way to pay off student loans? Paying more than the minimum but calling to make sure they apply the extra payment correctly – and then checking online to make sure your payment reflects this correctly. Pick up the phone and call them.


Photo Credit


Receive our newsletter and learn how to set up your debt repayment plan and learn tips and tricks to not get fooled by the loan companies so you can get out of debt faster.
Your privacy is 100% protected.
Post Tags:

I am Chenell Tull and so far, I've had a pretty rough time with my student loan debt. Recently, I've figured out a more productive "get out of debt" plan and the goal is to pay off over $60k in just 36 months. If you want to learn more, subscribe to the mailing list and get FREE updates on my successes and failures on this journey out of debt. 

  • Denise Bump Guido

    Very smart. And this applies to other loans as well. My mortgage company did the same thing. And my old mortgage company actually sent the overage back to me! You are doing a great job!

    • I just can’t believe how little this is talked about. I’ve heard it casually thrown into their conversations once or twice, but they never really explained what would happen if you didn’t call. I’m glad your company was nice enough to send the overage back to you, mine just kind of said, “well we will apply it to your loans now.” Yea, thanks. haha. Thanks for the kind words!