Question 1

How do extra payments affect student loans?

Accepted Answer

Making extra monthly payments goes directly toward the loan principal, which decreases the total interest charged over the lifetime of the loan and shortens the payoff duration.

Question 2

Are student loan interest rates simple or compound?

Accepted Answer

Most federal student loans use simple daily interest, where interest accumulates daily based on the outstanding principal balance, though interest daily accrues based on current principal.