How Does Loan Amortization Work for Student Loans?

When you purchase your home you usually miss this, because you are so excited at closing you are just scribbling your name wherever they ask you to, but they show you an “Amortization Schedule.”

Myself included, we usually miss it. But basically, amortization is how the interest costs will be distributed throughout your loan, in this case usually a 30 year mortgage.

If you have student loans you may or may not have wondered just how your loan works & how lender determines schedule for how the loan gets paid off? Well read how student loan amortization works here.

How Does Student Loan Amortization Work?

In the beginning, very little principal gets paid with the earlier loan payments. However, with each passing payment, more payment goes towards principal and less towards interest

That’s not fair, I can’t make any progress on my loan balance in the early years!  All my money is going towards interest! Yes this may be true, but fortunately, there is something that you can do about it.

Make extra payments when paying off student loans

When you make extra payment, it accelerates the loan amortization schedule so that your next loan payment will be made up of a greater amount of principal.

Sample Student Loan Amortization

To sum it up, extra monthly payments help you pay less interest and pay your student loan off faster by accelerating the loan amortization schedule.

How student loan amortization works simply put

Basically the more you pay now, the less you will pay later. The more you can get the principal balance down, the less interest you will pay.


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