Home |Student Loan | Does the standard repayment plan with Edfinancial involve making both principal and interest payments over 10 years as part of the 120 scheduled payments, and is it normal for them to charge daily interest even if I'm on AutoPay with fixed payments that were calculated to cover both principal and interest?

Does the standard repayment plan with Edfinancial involve making both principal and interest payments over 10 years as part of the 120 scheduled payments, and is it normal for them to charge daily interest even if I'm on AutoPay with fixed payments that were calculated to cover both principal and interest?

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Abbey Johnson, Helping with Student Loan Documentation
Answered on September 27,2023

Student loans accrue interest from the day you take them out.

The one-time CARES act pause has confused people about this fact. While you have an annual interest rate, interest accrues daily.

So payments calculated on the 10 year standard rate are not your current balance divided by 120.

They are payments that account for that daily interest so that your balance is paid in full at the end of those 120 payments.

In short, you don't need to call, it looks how it is supposed to look, and if you stay on the standard and make those 120 payments your loan will be paid off in 10 years. If you pay more, you will pay it off faster and pay less in interest (because interest accrues daily).

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