I have numerous private student loans, with amounts and interest rates like this:
$30,000 7% 25,000 7% 10,000 7% 5,000 6% 4,000 5%
My loan provider told me I have two options. In either case, I have to make the minimum monthly payment on every loan, which is split between interest and principal. My two options are:
I can make an additional payment above and beyond the minimum payment. I cannot tell them that this payment should be applied to principal only, and I cannot apply it to a specific loan, e.g. the ones with the highest interest rates. No matter what I tell them, they take any additional money I send them and split it evenly between the interest and principal on EVERY loan.
I can make the minimum payment only, and save the money in an external account until I have enough to pay off a single loan as a lump sum. Then, AND ONLY THEN, will they apply the additional money I send them to a loan of my choice (ONLY IF I CAN PAY IT OFF).
There are no separate fees for each loan, so should I basically treat this as one big loan with some average interest rate, and make as large a payment as I can every month?