From Stafford Student Loan and Private Student Loan News Blog:

It’s always pretty depressing when you look at your monthly statement and see how much of your loan goes straight to the interest. And since I know some of you have been wondering how this works exactly, I figured I’d give you the quick overview on how your money is applied to your outstanding loan.

- The loan holder first applies your payment to late charges or collections costs on your account (if any).

- Then, to the interest that has accumulated (accrued interest).

- The remainder of the payment is then applied to the principle balance.

Read the whole article originally published in: Stafford Student Loan and Private Student Loan News Blog.