Additional Payments to Principal

Additional Payments to Principal Questions

How can I make additional payments to reduce the principal balance of my loan?

If you would like to make additional payments to reduce the principal balance of your loan (known as a curtailment), you may do so at any time for any amount. Please make your check payable to the Regents of the University of California, mail it to the address below, and include a note with your check referencing your loan number and indicating that this amount is to be applied to reduce your principal balance. A payment history, showing the amount of the additional payment to principal, and the remaining loan balance, will be mailed to you following the processing of this curtailment.

The address of the payment processing center is:

University of California
Office of Loan Programs
P.O. Box 742968
Los Angeles, CA 90074-2968

When will my additional payment to principal reduce my payment amount?
Your payment amount is adjusted once a year (see question B-1 above). In order to reduce your payment for the upcoming adjustment, the curtailment must be received by our office at least twenty days prior to the date of your interest rate change.
Does my additional payment to principal result in a change in the distribution of principal and interest?
Yes. MOP loans are fully amortizing. That is, the loan amount will be fully paid off, without a balloon payment, at the end of a fixed period of time. Each payment is split between principal and interest based upon the interest rate, number of years remaining until maturity and, the unpaid principal balance.
When the principal balance is decreased by an additional curtailment, a greater portion of each succeeding payment is allocated toward principal than if the curtailment had not been received. However, the amount of your monthly payment will not change until the next scheduled payment adjustment (at your anniversary date).
Is there any disadvantage to making additional payments to principal?
Yes. As noted above, more funds will be applied to principal, and less to interest, with each subsequent payment. Accordingly, there will be less interest paid in that particular calendar year, and less interest for the borrower to declare as a deduction on their income tax forms. Please note, as well, that making curtailments will not reduce the term of your loan.