Paying off loan faster

Any payments on student loans are applied to any outstanding interest first, then principal . So if you send an addtional payment say 10 days after the first, it will pay the 10 days of accrued interest first, then principal.

You will always some some interest by paying it off sooner. How much you save depends on how the interest is calculated, when and how you pay. On a simple interest contract, you will have an instant effect the day you make an early payment, because it trickles through the rest of the loan and actually saves you interest on every future payment as well. However, a Precomputed contract (Rule of 78ths) doesn't see any saving until a rebate is applied the day you actually pay it off.

Most loans these days are simple interest. Simple interest contract accrue daily interest on the principal balance. The daily accruals don't directly compound onto the balance; rather when payments are received, they are applied to any outstanding interest first before it is applied to the principal. In that sense, you can't actually ask them to "put all of a payment towards the principal." So, like Soaplady said, if you make a payment 10 days after the first, then 10 days of interest will come out of that 2nd payment. Rest assured though, making early payments or paying more than required will always save interest in the long run, since future interest will be calculated on a lowered principal than expected.

I do that sometimes. It's great because with my loan company, they also credit the 'extra' payment as part of the following month's 'minimum payment'.

In other words, I pay $750 a month to AES. Let's say one month I make a payment of $1000. Next month, if I want to, I only have to pay $500