<prompt> Human: Hi,Ive recently subscribed to rpersonalfinance and Im really learning a lot. So, thanks for that! The question I have for this post is in regard to the interest rate and how much money from each payment is being applied to the interest, and how much is being applied to the principal.For reference, Im 27, have about 14,000 6 in student loans, just started a new job and made just north of 60,000 this year. About a year ago, through my banks online bill pay, I setup automatic monthly payments for my loan and figured it would take care of itself over time. Tonight, I decided to take a look at the progress Id made and was more than a little appalled by what I saw. Despite the fact that the loans interest is at 6 my monthly payments of about 225 are being applied to the loan in a roughly 65 principal 35 interest ratio!!!Am I just totally missing the boat on how interest works? Would a larger monthly payment have a higher percentage applied toward the principal? And the real question on my mind:I work in sales and have a very unsteady income. Should I use the majority of the 4,000 I have saved up on beating this loan?Thanks so much for any advice.  <response>: The math is actually quite simple:Assume 14,000 in loans at 6 interest rate.Whats the annual interest? Thats simply 14000 0.06 840. This means that assuming you dont pay down principal you pay 840 every year in interest. Youll actually pay slightly less because each payment reduces the principal.Whats the monthly interest? Thats simply the annual interest divided by 12 840 12 70.So your first monthly 225 payment pays 70 of interest and 155 of principal. By reducing the principal by 155, the next month, youll have slightly less accrued interest. With a principal of 13,845, youll pay only 69.23 in interest instead of 70 next month.Your monthly payment is 225, but hypothetically speaking, what if your monthly payment was different?If you pay less than 70 each month, then your loan will actually increase in size. You wouldnt pay enough to even pay off the accrued interest, so youll actually owe more and more money.If you pay more than 70 each month, then your loan will decrease in size with each payment.In the extreme, if your monthly payment was 14070, then your loan would be paid off by the first payment, and of that 14000, 70 would go to interest and 14000 to principal. 