Understanding How Payments Work
Learn How Payments are Allocated And Applied
Your payment may be allocated and applied differently depending on whether you have a federal or private loan, the status of your loan, and if you have multiple loans that are combined into one billing or loan group.
Payment Allocation
Allocation is how a payment is distributed across multiple loans. When you make a payment online, you can specify which loans you would like your payment allocated toward, including any Overpayment you might make.
You can also instruct us to allocate payments differently for mailed payments. Clearly write your instructions on a separate piece of paper included with your check. We cannot process instructions written on the check or remittance slip.
Payment Application
Once we allocate a payment or a portion of a payment to a specific loan or loans, that amount is applied based on the terms of each loan's promissory note. Typically, it is applied first to Unpaid Fees, then to Unpaid Interest, and then to Unpaid Principal.
Important Reminder
If the payment doesn't satisfy the total payment due, including past due amounts, a late fee may be assessed, and the amount of interest paid over the life of a loan will increase. Past due amounts may be reported to the consumer reporting agencies.
Payment Posting
Your payment will be credited effective as of the scheduled electronic payment date or the date the mailed payment was received.
Online payments made by 11:59 PM ET will be credited effective as of the current date – including weekends and banking holidays.
If you’re enrolled in Auto Pay, your payment will be effective on your due date.
Please allow time for mailing and keep in mind that mailed payments are only processed on business days.
Please allow at least 2 business days for processing, from the scheduled date for electronic payments or the date delivered for mailed payments.
Log in and go to your Account History to view your complete payment history.
Payment Application, Allocation, & Billing Directions
Single Loan — Account is Current
Payments are applied based on the terms of each loan’s promissory note.
First, the payment is typically applied to Unpaid Fees.
Second, the payment is typically applied to Unpaid Interest. Keep in mind that interest accrues daily.
Third, the payment is applied to the Unpaid Principal.
If you have a FFELP loan in an Income-Based Repayment (IBR) plan, the payment goes first to Unpaid Interest, then to Unpaid Fees, and then to Unpaid Principal.
We will advance your payment due date by the number of full Monthly Payments that are covered by any Overpayment – unless you provide special payment instructions. For loans with a 16-digit account number, unless your loans are repaid through Auto Pay, an Overpayment less than your next Monthly Payment Amount will reduce the amount of your next payment due.
Even when loans are paid ahead, your Auto Pay amount will always be equal to the Monthly Payment Amount or a greater amount that you may specify for each of your loans in Auto Pay.
Single Loan — Account is Past Due
Payments are applied based on the terms of each loan’s promissory note.
First, the payment is typically applied to Unpaid Fees.
Second, the payment is typically applied to Unpaid Interest. Keep in mind that interest accrues daily. If your payment is past due, you should anticipate that your loan will accrue more interest than when payments are made on time.
Third, the payment is applied to the Unpaid Principal.
If you have a FFELP loan in an Income-Based Repayment (IBR) plan, the payment goes first to Unpaid Interest, then to Unpaid Fees, and then to Unpaid Principal.
We will advance your payment due date by the number of full Monthly Payments that are covered by any Overpayment – unless you provide special payment instructions. For loans with a 16-digit account number, unless your loans are repaid through Auto Pay, an Overpayment less than your next Monthly Payment Amount will reduce the amount of your next payment due.
Even when loans are paid ahead, your Auto Pay amount will always be equal to the Monthly Payment Amount or a greater amount that you may specify for each of your loans in Auto Pay.
Multiple Loans — Account is Current
When you have multiple payments for similar loan types, we may group them together in a "Loan Group" or "Billing Group" so you will receive one consolidated statement for the loans in the group and can make one payment to cover them all.
You may request that your loans be ungrouped so that you receive separate statements by calling us at 888-272-5543.
If you have multiple loans, we first allocate the payment among your loans and then apply the payment to your Unpaid Fees, Unpaid Interest, and Unpaid Principal as described below.
Payment allocation:
Unless specific instructions are provided, we automatically allocate your payments across your loans as follows: your payment will be allocated first to any delinquent loans in the Billing Group (loans with the oldest delinquency will be paid first). When all loans are at the same delinquency level, the payment will go to each loan in the Billing Group, prorated according to its Current Amount Due, which is the Monthly Payment Amount or a lesser amount if some of the Monthly Payment Amount has previously been paid. If the amount of the payment exceeds the Past Due Amount and Current Amount Due but is less than the Total Payment Due, the remainder of the payment will be prorated based on Unpaid Fees. After the Total Payment Due is satisfied or if no payment is due, additional funds are an Overpayment and will be allocated to your loan with the highest interest rate in the Billing Group. If you have more than one loan with the same highest interest rate in the Billing Group, then the Overpayment will be allocated to those unsubsidized loans, prorated according to the Monthly Payment Amount. If loans in the Billing Group with the same highest interest rate are all subsidized, then the payment will be allocated to those loans prorated by Monthly Payment Amount. If no payment is due for any of your loans (for example, if your loans aren't yet in repayment), your Overpayment will be allocated among the highest interest loan(s) in the Billing Group, prorated according to each Loan's Outstanding Balance.
Payment application order:
Payments are applied based on the terms of each loan's promissory note.
First, the payment is typically applied to Unpaid Fees.
Second, the payment is typically applied to Unpaid Interest. Keep in mind that interest accrues daily. If your payment is past due, you should anticipate that your loan will accrue more interest than when payments are made on time.
Third, the payment is applied to the Unpaid Principal.
If you have a FFELP loan in an Income-Based Repayment (IBR) plan, the payment goes first to Unpaid Interest, then to Unpaid Fees, and then to Unpaid Principal.
We will advance your payment due date by the number of full Monthly Payments that are covered by any Overpayment – unless you provide special payment instructions. For loans with a 16-digit account number, unless your loans are repaid through Auto Pay, an Overpayment less than your next Monthly Payment Amount will reduce the amount of your next payment due.
Even when loans are paid ahead, your Auto Pay amount will always be equal to the Monthly Payment Amount or a greater amount that you may specify for each of your loans in Auto Pay.
Multiple Loans — Account is Past Due
If you have multiple loans, we first allocate the payment among your loans and then apply the payment to your Unpaid Fees, Unpaid Interest, and Unpaid Principal as described below.
Payment allocation:
Unless you provide special payment instructions, the payment will be allocated first to loans with the oldest delinquency, prorated by the Past Due Amount for each loan by billing cycle. When all loans are at the same delinquency level, the payment will go to each loan in the Billing Group, prorated according to its Current Amount Due.
For residents of California, Colorado, Maine, Massachusetts, Minnesota, New Jersey, New York, Rhode Island, Virginia, and Washington DC your Underpayment will be allocated to satisfy as many individual loan payments as possible, first to loans with the oldest delinquency, in order from lowest to greatest Past Due Amount by billing cycle. Any remaining amount will be prorated across loans that share the same age of delinquency that have not yet been paid.
If the amount of your payment exceeds the Current Amount due but is less than the Total Payment Due, the remainder of your payment will be prorated based on any Unpaid Fees. With the exception of payments made by Auto Pay, once the Total Amount Due has been satisfied for all loans being paid, any Overpayment will be allocated to your loan with the highest interest rate. If you have more than one loan in the Billing Group with the same highest interest rate, then the Overpayment will be allocated to any unsubsidized loan(s) being paid, prorated according to the Monthly Payment Amount. If loans with the highest interest rate are all subsidized, then the payment will be allocated to those loans prorated by the Monthly Payment Amount. If none of your loans have a Monthly Payment Amount, we’ll prorate by Current Balance.
Payment application order:
Payments are applied based on the terms of each loan’s promissory note.
First, the payment is typically applied to Unpaid Fees.
Second, the payment is typically applied to Unpaid Interest. Keep in mind that interest accrues daily. If your payment is past due, you should anticipate that your loan will accrue more interest than when payments are made on time.
Third, the payment is applied to the Unpaid Principal.
If you have a FFELP loan in an Income-Based Repayment (IBR) plan, the payment goes first to Unpaid Interest, then to Unpaid Fees, and then to Unpaid Principal.
We will advance your payment due date by the number of full Monthly Payments that are covered by any Overpayment – unless you provide special payment instructions. For loans with a 16-digit account number, unless your loans are repaid through Auto Pay, an Overpayment less than your next Monthly Payment Amount will reduce the amount of your next payment due.
Even when loans are paid ahead, your Auto Pay amount will always be equal to the Monthly Payment Amount or a greater amount that you may specify for each of your loans in Auto Pay.
Providing Special Payment Instructions
If you’d like to provide special allocation or billing instructions, you may do so one-time for each payment being made or update your profile to save payment directions for any qualifying payments you make in the future. You can change your saved directions at any time.
Ways you can provide saved allocation directions
Update your profile and select the payment directions that work best for your goals.
Send instructions on a separate piece of paper when making your payment, telling us which of our available allocation options you'd like for us to save for future payments.
Tell our agents to save your preferred allocation option when making a payment by phone.
Ways you can provide one-time allocation directions
Use the "Specify for Each Loan" option when making a payment online to tell us how much you'd like to pay towards each loan.
Use the "Auto Allocate" option when making a payment online to tell us which method you'd like us to use to allocate your payment across your loans.
Send one-time instructions on a separate piece of paper when mailing your payment.
Tell our agents which loans you'd like to pay when making a payment by phone.
Ways you can provide one-time billing directions
Select the billing direction of your choice when making a qualifying Overpayment online.
Send one-time instructions on a separate piece of paper when mailing your payment, telling us you want to be billed for your next, full monthly payment. For example, "do not advance my due date greater than one month with this payment".
Tell our agents whether you want to be billed for your next, full monthly payment when making an Overpayment by phone.
Ways you can provide saved billing directions
Update your profile and select the payment directions that work best for your goals.
Send instructions on a separate piece of paper when making your payment, telling us if you want to be billed for your next, full monthly payment amount for any Overpayments you may make in the future. For example, "save my directions to never advance my due date greater than one month with any Overpayments".
Tell our agents to save your preferred billing direction when making a payment by phone.
Options to select from for saved Overpayment allocation directions
Highest Interest Rate — The Overpayment amount will be paid to your loan with the highest interest rate.
Highest Current Balance — The Overpayment amount will be paid to your loan with the highest Current Balance.
Lowest Current Balance — The Overpayment amount will be paid to your loan with the lowest Current Balance.
Prorate Across Selected Loans — Prorate means that we will divide the Overpayment across all the loans you selected. The calculation is based on the Monthly Payment Amount.
Unsubsidized and Private — Unlike Subsidized federal loans — when you are not responsible for interest accruing on the loan during certain periods, such as in-school, grace, and deferment — Unsubsidized and Private loans accrue interest at all times and you are responsible for paying it. If you select this option, the Overpayment will be prorated by Monthly Payment Amount across your Unsubsidized and Private loans.
Options to select from for saved Underpayment allocation directions
By most delinquent, then lowest Monthly Payment — Your Underpayment will be allocated to satisfy as many individual loan payments as possible, first to loans with the oldest delinquency, in order from lowest to greatest Past Due Amount by billing cycle. Any remaining amount will be prorated across loans that share the same age of delinquency that have not yet been paid.
View a past due account payment example with same due date
View a past due account payment example with different due dates
Align delinquencies — Your Underpayment will be allocated to satisfy as many individual loan payments as possible, first to loans with the oldest delinquency, in order from lowest to greatest Past Due Amount by billing cycle. Any remaining amount will be prorated across loans that share the same age of delinquency that have not yet been paid.
View a past due account payment example with same due date
View a past due account payment example with different due dates
Prorate based on total past due amounts — Your Underpayment will be allocated first to any delinquent loans being paid, prorated by the total Past Due Amount for each loan.
View a past due account payment example with same due date
View a past due account payment example with different due dates
Options to select from for saved Overpayment billing directions
Advance my due date by the number of payments I cover — Even if you have zero amount due on your billing statement, continuing to make payments will reduce your total cost of borrowing. If your extra funds are equal to or more than the amount of your next Monthly Payment(s), we will advance your payment due date by the number of full payments that are covered by the extra funds. Note that for private loans with a 16-digit account number, an Overpayment less than the next full Monthly Payment amount will reduce your next monthly bill by that amount.
Bill me for my full Monthly Payment Amount — You will be required to continue making full Monthly Payments with your upcoming billing statements.
Payment Glossary
Account Number
The primary identifier for an account at the customer level. It is a reference for all the loans associated with that customer.
Accrued Interest
Interest that has accrued during the prior Billing Cycle.
Approved Loan Amount
The original amount of funds that were approved for the customer.
Approximate Daily Interest
To find out how much interest accrues daily, use this formula: (Unpaid Principal balance x Interest Rate) ÷ Number of Days in the Year = Approximate Daily Interest.
Approximate Interest Due
Approximate Daily Interest x number of days in your billing period = Approximate Interest Due.
Balance
The amount of debt still owed on an account.
Billing Cycle
The period of time between the generation of billing statements. The Billing Cycle's start and end dates may or may not be the same as the Billing Period's start and end dates.
Billing Group
One or more loans that are combined in a grouping to allow customers to receive a single billing device and make a single payment for the respective loan(s).
Billing Period
The interval of time during which bills are prepared. The Billing Period start and end dates may not be the same as the Billing Cycle start and end dates.
Capitalized Interest
Accrued interest that has been added to the Unpaid Principal balance. Since the interest that is capitalized gets added to the principal, the customer will accrue interest on a higher balance.
Current Amount Due
The Monthly Payment Amount or the remainder of the Monthly Payment Amount if an overpayment was received in a previous Billing Cycle.
Current Balance
Unpaid Principal + Unpaid Interest + Unpaid Fees, if applicable.
Disbursement Date
The date when the Approved Loan Amount was paid to the borrower or school.
Disbursement Fee
A fee charged to the customer for the loan being disbursed. This is added to the loan amount at disbursement and is based on the borrower's or cosigner's credit history. Also known as an Up-Front or Front-End Fee.
Disbursed Principal
Original Principal less fees charged at time of loan origination.
Fees Assessed
The sum of the charges assigned in the prior Billing Cycle.
Last Payment Effective Date
The date the most recent payment was credited to the account within the last billing period.
Late Fee
A charge that is assessed if your payment is not made by the date presented on your billing statement to avoid such fee.
Loan Group
One or more loans that are combined in a grouping to allow customers to receive a single billing device and make a single payment for the respective loan(s).
Loan Group Number
The numeric identifier utilized to distinguish a Loan/Billing Group.
Loan ID
The numeric identifier utilized to distinguish an individual loan.
Loan's Outstanding Balance
Current Balance less the amount of an overpayment that has already satisfied the Past Due Amount and Current Amount Due (if applicable).
Monthly Payment Amount
The amount required each month to repay the loan according to the repayment schedule.
Monthly Payment
The amount required each month to repay the loan according to the repayment schedule.
Original Principal
The original approved loan amount.
Other Fees
A charge or charges assessed based on qualifying conditions that are disclosed on the promissory note.
Overpayment
The portion of a payment received in excess of the Past Due Amount + Current Amount Due + Unpaid Fees.
Past Due Amount
The remainder of monthly payment amounts from previous Billing Cycles that have not been satisfied by the customer (this does not include fees).
Previous Statement Balance
The prior month's billing statement's "Current Balance.”
Principal Reduction
The amount of funds that have reduced the Unpaid Principal in the prior Billing Cycles.
Repayment Fee
A fee charged to the customer for entering repayment. It is a percentage of the principal balance after Unpaid Interest has been capitalized. Also known as a Back End Premium Fee.
Returned Check Fee
Also known as a non-sufficient funds fee (NSF), a fee may be assessed when payment is returned due to insufficient funds.
Total Payment Due
Past Due Amount + Current Amount Due + Unpaid Fees. This is the amount the customer needs to pay in order to complete their repayment schedule by the projected date (by paying the fees, the remainder of the payment is the amount needed to satisfy the interest and/or principal expected in the repayment schedule).
Underpayment
A payment received that is insufficient to cover the Past Due Amount + Current Amount Due.
Unpaid Fees
Fees that were assessed to the customer in the past and have not been satisfied.
Unpaid Interest
Overall interest that has accrued that has not yet been satisfied by the customer.
Unpaid Principal
The Original Principal (the original loan amount borrowed by the customer), less any prior reductions to the Original Principal, plus any interest that has been capitalized.