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.

 
 

Loan Payment Allocation

It's important to understand how your loan payments are allocated and applied. Every time you make a student loan payment, it helps pay down various portions of your loan. It typically is applied first to fees, then to outstanding interest, then to principal.

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.

To find out how your payments are allocated and applied, start by identifying what type of loan you have. Then review how your payment is processed.


What Type of Loan Do You Have?

Not sure what type of loan you have?


Federal Loans

If you applied for financing using the Free Application for Federal Student Aid (FAFSA), you may have been offered a federal loan.

Learn about payment allocations for:

  • Direct Loans (William D. Ford Federal Direct Loan Program) – Owned by the U.S. Department of Education
  • FFELP Loans (Federal Family Education Loan Program) – Owned by the U.S. Department of Education
  • FFELP Loans and HEAL Loans (Health Education Assistance Loans) – Owned by a third-party lender

Log in to the National Student Loan Data System (NSLDS) to see your loan types

Private Loans

If you received a credit-based loan from a bank or other private lender, then you have a private student loan.

Your payment allocation and application may be different based on how your loan is serviced.

Learn about payment allocations for: