Is that title odd enough for you?
SMARP is my own little acronym for “Sallie Mae Accelerated Repayment Plan“. I did think for a while about coming up with a “T” word for the end so it would cleverly be “SMART” but, well, I dare to be different.
Before I get into starting the student loan accelerated repayment, I want to address my remaining debts a little bit. We have three main debts remaining (besides our mortgage). They are:
- Spouse Student Loan: $11,537.66 @ 9% interest
- My Student Loan: $11,636.71 @ 7% interest
- Car Loan: $3136.69 @ 4% interest
Although I talk about the Debt Snowball , as defined by Dave Ramsey, in my debt repayment plans, I don’t follow the snowball strictly to the order he does it (lowest to highest balance). I am an interest order kind of gal, and I address my debts by which has the highest interest. So even though my car loan has the smallest balance, I won’t pay extra to the car loan at all before it gets paid off just by time passing (unless I get some kind of huge windfall). The credit cards had the highest interest (even though the credit card debt was at 0%, that was a temporary rate and would eventually reset to ~12%) so I attacked that debt first. Now that the credit card debt is paid off entirely (yay!) I am on to attacking my spouse’s student loan.
Phase 1: Establish a repayment method to reduce principal.
So on to SMARP. Phase one of accelerating the debt repayments to Sallie Mae is figuring out how to get Sallie Mae to apply extra payments to principal and not to advancing my next payment due date. I want to reduce my principal and therefore reduce the amount of interest I get charged, not just pay the total amount I would end up owing them after my entire loan term at a faster pace. I am not sure how they can get away with NOT reducing my principal when I send extra payments, but they can, and they do.
I have called Sallie Mae several times in the past to explore how to do this with online payments. Each time, I get a different answer, and each time, the answer is either irritating or incorrect. I have been told that the only way I can have my payment go to principal is to mail the payment and indicate such on the check (which I think is the actual answer), and I have also been told I can simply pay it online and it will automatically be applied to principal (NO – this does not work). In the FAQ on the Sallie Mae website, the only information about overpayments is they will advance your due date unless you indicate you want it applied to principal – but no explanation of how to actually do that through online payments. I have tried overpaying (by small amounts as an experiment) online, and it always gets applied to my next payment due, not reducing the principal amount.
Sallie Mae forced me into online payments by refusing to send me coupon books any longer once they found out my email address (I am happy to make online payments, but I was unhappy at being forced to do so), so I think it is pretty unfair of them to not provide some way of indicating with an online payment that the overpayment should go to principal. But they are the lender, and I am the borrower, and they own me until this process is complete, so… so be it. Today I started phase one by emailing their customer service department to determine definitively if there is any way of designating online overpayments to principal. Even if I am told there is, I will test it out with a small amount before I commit to a large overpayment, but for some reason I feel like an email might tell me more accurate information than a random phone person. I am probably wrong about that. I also asked for the address the overpayments need to be sent to if there is no online method for designating payments to principal and a list of EXACTLY what needs to be written on the check and included with the overpayment so that it goes to principal.
I know they’re not going to make it easy. I wish I could pay off the entire balance in one fell swoop. But that is probably not going to happen, so I’ll work within their system. I have faith I shall prevail.