Home |Student Loan | Will making a $10,000 lump sum payment on my $50,000 Parent PLUS Student Loan lower my monthly payments? Need advice on contacting Mohela.

Will making a $10,000 lump sum payment on my $50,000 Parent PLUS Student Loan lower my monthly payments? Need advice on contacting Mohela.

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Abbey Johnson, Helping with Student Loan Documentation
Answered on October 07,2023

It depends on what payment plan you are on and how you allocate the payment. If you are on a standard plan the payment is fixed so that each loan has a minimum payment. If there is one 50k loan, paying 10k will not automatically lower your payment, it will just shorten the term. (You will finish paying it faster). If you have multiple loans and you pay off an entire loan with that 10k, then your payment should go down.

If the loans are on an IDR plan, the loan balance isn’t really related to what you pay so paying the loan doesn’t decrease your payment.

(If you are on a graduated plan, the answer is more complicated).

No matter what you choose, each loan has interest that accrued daily and payments must be applied to any accrued interest before the principal of the loan (so ignore anyone telling you to pay only the principal or apply it to the principal because they are misunderstanding).

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