Understand payment allocation and application

Payment allocation
Payment allocation is how a payment is distributed across multiple loans. If the payment is received with the remittance slip on the billing statement, we will automatically allocate the payment to all of the loans in that loan group.1

Payment application
Once we allocate a payment to a specific loan, payments are applied based on the terms of each loan’s Promissory Note, usually first to Unpaid Fees, then to Unpaid Interest, and then to Current Principal.

Payment allocation examples

Overpayment: A payment that is greater than the Current Amount Due (plus any applicable Past Due Amount) will be allocated as follows.

Highest interest rate

  • If your payment satisfies the Current Amount Due (plus any applicable Past Due Amount), the remaining payment amount will be allocated to the loan with the highest interest rate.
  • If you have multiple loans with the same interest rate, the remaining payment amount will be allocated to the loan with the highest Current Balance.
  • If no payment is due, your payment will be allocated to the loan with the highest interest rate.
  • If you have multiple loans with the same interest rate, the payment amount will be allocated to the loan with the highest Current Balance.
 

Underpayment: A payment that is less than the Current Amount Due (plus any applicable Past Due Amount) will be allocated as follows.

Lowest to Highest Due Amount

  • If your payment is less than the Past Due Amount, loans at the oldest delinquency level will be paid first until all loans are at the same delinquency level.
  • Once all of the loans are at the same delinquency level, the remaining payment amount will be allocated according to each loan’s Past Due Amount from lowest to highest within that group delinquency level.
  • If your payment satisfies the Past Due Amount, the remaining payment amount will be allocated according to each loan’s Current Amount Due from lowest to highest.

View underpayment example


Andrea shows how payments are applied to most student loans


Related topics


1. When you are required to make payments for multiple loans, we may group them together in a "loan group," so you receive one consolidated billing statement and can make one payment to cover them all. You may ask us to ungroup your loans by calling us at 800-472-5543 (800-4-SALLIE), but this will result in multiple billing statements.
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