The process of paying off student loans can be confusing. Between changing
interest rates and varying principal balances, it can be difficult to
determine how to best navigate paying off multiple loans in a timely and
effective mater. Fortunately,
Firstmark Services, a company that services private student loans for major lenders like
Citibank, has recently changed their payment allocation policy,
helping borrowers to pay down their loans quicker. We've outlined some of the major changes below.
Above Amount Due:
If you find yourself in a position to pay more than your required monthly
payment, you are then faced with the concern of which account the extra
funds would be applied. Under Firstmark’s new system, any payment
received in excess of the balance due is
automatically attributed to the loan with the highest interest rate.
Placing priority on the loan with the highest interest rate should serve
to mitigate the amount of time the borrower would be paying on the loan,
thereby decreasing the overall cost of loan payments.
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Below Amount Due:
Unfortunately, one might find themselves in a position where they cannot
afford to make the required monthly payment, but nonetheless are able
to make a payment of some amount. In this situation, Firstmark will now
automatically apply any payment amount to your loan with the lowest current balance. This may seem strange, but this allocation of funds actually serves to
cost you less in the long run.
Spreading insufficient payment across multiple accounts can lead to situations
where all of your accounts become delinquent. In many instances, delinquency
on student loans can lead to additional fees. Applying all of the funds
to the account with the lowest balance allows that account to be paid
quickly, and avoids the maximum amount of late fees.
Should you find yourself in a status of delinquency on multiple accounts,
Firstmark’s new system will apply any funds to the account that
has been in delinquency the longest. This method of repayment allows for
accounts to be in a more equal status of delinquency, meaning that all
accounts should cease to be late simultaneously. Similar to the situation
previously detailed, this should allow for the
avoidance of the maximum amount of late fees.
Of course, this new payment allocation formula may not be the perfect solution
for everyone, and thankfully Firstmark is still providing the option of
manual payment instructions via mail or
Call to speak to a student loan lawyer - (888) 301-0584
Law Office of Simon Goldenberg PLLC
Student Loan Payment Allocation
All of these changes are a considerable step forward in demystifying
student loan repayment. Firstmark has set a precedent for loan servicers that will hopefully
be followed by many to come. Unfortunately, not all loan servicers can
be expected to improve their repayment process, and many issues may persist.
If you find yourself in a status of default on multiple student loans,
getting back on track can often be difficult. At the Law Office of Simon
Goldenberg, PLLC, our
student loan negotiation lawyers have helped many distressed borrowers resolve defaulted student loans,
sometimes at substantially reduced amounts. Debt settlement, loan restructuring
and negotiating payment plans are all courses of action that may be available to you.
Contact us today to learn how we can help you
get out of student loan debt.
Not legal advice, for informational purposes only. Not responsible for
typographical errors. We are headquartered in New York City and we practice
law only in New York and New Jersey. Contact us to learn more.