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What is Amortization? | Repaying Your Loan

The amortization of a loan is the accounting process of gradually reducing the principal balance through regularly scheduled monthly payments until the loan is paid in full. This is standard for all student loans and can change over the repayment of the loan. Payments are applied first towards accrued interest and then towards the principal balance. Re-amortization may occur upon request when a borrower has paid additional funds towards their loan balance above what is required for their monthly minimum amount due or automatically when they have recently finished a period of deferred payments such as forbearance, deferment, Skip-A-Payment(1), and grace(2)

Whenever an extra payment is made, it’s typically used to pay off the loan sooner than the anticipated repayment date. The exception would be if a borrower not enrolled in Auto Pay(3) has selected their extra payments to count towards future payments. Student loan borrowers who pay extra funds towards their loan and are looking to lower their monthly payments without refinancing again may request to re-amortize their loan, which will extend the loan repayment back to the original term length in order to lower the monthly payment. There is no cost associated with re-calculating the minimum payment, and it will have no impact on your interest rate or credit report.

Why would someone re-amortize?

Some common reasons clients request to re-amortize is if they need to lower their monthly minimum payment while applying for another loan or to reduce their monthly financial burden. Oftentimes, mortgage and other lending companies will look at an individual's total monthly payment responsibilities when assessing rates. Lowering the monthly minimum payment required may help borrowers get a better interest rate when applying for these types of loans. 

In addition, a loan may be re-amortized to ensure the loan remains on schedule within the anticipated agreed-upon repayment period. This happens automatically after periods of suspended payments and may lead to an increase in the monthly payment. 

Can I get an amortization schedule?

Absolutely! The best way to request an amortization schedule is to contact our Client Happiness team by clicking the “Get In Touch” button at the bottom of the page. The timeline to receive an amortization schedule is typically 3-5 business days and will show a breakdown of how much each monthly payment will be applied to interest vs principal over the duration of your repayment with us. 

It’s important to note that we are only able to generate schedules for loans that are currently in repayment. In addition, making an extra, early, or late payment or adjusting your payment schedule (i.e., large extra payment or suspending payments) will change the loan’s future amortization breakdown. If you would simply like to view your past payment history, feel free to check out this article here.

How can I start the process to re-amortize my loan?

If you have recently had a period of forbearance, deferment, Skip-A-Payment, grace period, or if you have a variable rate loan, your loan will automatically be amortized to a new monthly minimum payment. It’s important to note, that this may lead to an increase in your payment if you have not made any payments towards your loan balance during the window of suspended payments. This is to help ensure the loan remains on track for your anticipated agreed-upon repayment period. 

If you have made a large or extra payment and would like to extend your loan to your original repayment date, click the “Get In Touch” button at the bottom of the page and let our team know. It’s important to note that it can take 1 to 3 billing cycles to process the request to re-amortize your loan, so please make sure you plan accordingly. 


(1) Earnest clients may skip one payment every 12 months. Your first request to Skip-A-Payment can be made once you’ve made at least 6 months of consecutive on-time payments and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment period. Please be aware that a skipped payment does count toward the forbearance limits and skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

(2) Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

(3) You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

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