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. 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.

Overpayment

The portion of a payment received in excess of the Past Due Amount + Current Amount Due + Unpaid Fees.

REMEMBER

If the payment doesn't satisfy the total payment due, including past due amounts, a late fee may be assessed (except on loans owned by the U.S. Department of Education), 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.

 
 

FFELP Loan Payments

Payments for FFELP, HEAL, and Private Loans owned by Navient or other non-government lenders

Learn how payments are allocated and applied.


Single Loan – Your Account is Current

  • First, the payment is applied to Unpaid Fees.
  • Second, the payment is 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 instruct us to do otherwise.*

View a payment example

Single Loan – Your Account is Past Due

  • First, the payment is applied to Unpaid Fees.
  • Second, the payment is 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 instruct us to do otherwise.*

View a payment example

Multiple Loans in a Group – Your Account is Current

When you have multiple payments for similar loan types, we may group them together in a "Billing Group" so you will receive one consolidated statement for the loans in the Billing 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.

  • The payment is allocated based on the Current Amount Due for each loan being paid. Unless you instruct us to do otherwise,* once the Current 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.
  • Once a portion of the payment is allocated to each loan, we apply it in the following manner:
    • First, the payment is applied to Unpaid Fees.
    • Second, the payment is 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 instruct us to do otherwise.*

View a payment example

Multiple Loans in a Group – Your Account is Past Due

  • Unless you instruct us to do otherwise,* the payment will be allocated to the loans you are paying based on each loan's Past Due Amount.
  • Once the Past Due Amounts have been covered, the payment is then allocated based on the Current Amount Due for each loan being paid.
  • Unless you instruct us to do otherwise,* once the Current 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.
  • Once a portion of the payment is allocated to each loan, we apply it in the following manner:
    • First, the payment is applied to Unpaid Fees.
    • Second, the payment is 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 instruct us to do otherwise.*

View a payment example

*Providing Special Payment Instructions

How to Provide Allocation Directions for an Overpayment

For mailed payments:

You may direct how your payments are allocated among your loans by mailing your check with a separate piece of paper providing us with your allocation instructions.

For payments made online or by phone:

When you make a payment online or by phone, you can specify the amount that you pay toward each loan.

You can also pay one Overpayment amount and provide direction on how to allocate any excess funds across your selected loans.

If you choose the Direct an Overpayment option, we will apply your payment to satisfy your Current Amount Due for the selected loans and any excess funds remaining will be allocated based on the direction you provide to us.

Save Your Overpayment Allocation Direction

The Allocation Direction allows you to tell us how you would like your Overpayment allocated across your loans for payments made online or by phone that have not yet been scheduled. If you are the primary borrower or a cosigner for a loan that is not owned by the U.S. Department of Education, your direction will also apply to payments made by mail. (If you are not the primary borrower or a cosigner for a loan that is not owned by the U.S. Department of Education, please send separate, written instructions for Overpayments made by mail.)

Options for Overpayment Allocation Directions are:

  • 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 by Monthly Payment Amount – 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.

To save your preferences, log in to your account and go to your Profile to make your selection in Overpayment Directions. You may also save your preferences by speaking with an agent by phone.

View a payment example

How to Provide Billing Directions for an Overpayment

For mailed payments:

When you make an Overpayment, you may instruct us whether you want any Overpayment to advance your next payment due date. Please include your instructions to not advance your payment due date on a separate piece of paper enclosed with your payment. Be sure to include your Account Number with your instructions.

For payments made online or by phone:

You will be able to choose whether you want any Overpayment made online or by phone to advance your next payment due date.

Save Your Overpayment Billing Direction

You may also save your Overpayment Billing Direction for payments that have not yet been scheduled. This will tell us if you would like to be billed for your next full Monthly Payment Amount when you make an Overpayment online or by phone that is equal to or more than the amount of future Monthly Payments. If you are the primary borrower or a cosigner for a loan that is not owned by the U.S. Department of Education, your direction will also apply to payments made by mail. (If you are not the primary borrower or a cosigner for a loan that is not owned by the U.S. Department of Education, please send separate, written instructions for Overpayments made by mail.)

Options for Overpayment Billing Direction include:

  • 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.
  • Bill me for my full Monthly Payment Amount. You will be required to make a full Monthly Payment with your next billing statement.

To save your preferences for payments that have not yet been scheduled, log in to your account and go to your Profile to make your selection in Overpayment Directions  You may also save your preferences by speaking with an agent by phone.