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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. If you have any questions, call us at 800-4-SALLIE (800-472-5543800-472-5543).


What kind of loans do 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:

To find out more about which loans you have, log in to the National Student Loan Data System.

Private loans

If you received a credit-based loan from a bank or other private lender like Sallie Mae, 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:

Private loans – if you receive this type of statement

Private loans – if you receive this type of statement
(Loans reflected in this type of statement are allocated the same way as FFELP loans that are owned by a third-party lender.)


Payment allocations for Direct and FFELP loans owned by the U.S. Department of Education

Learn how payments are allocated and applied to accrued, unpaid interest and current principal balances of loans owned by the U.S. Department of Education.

How a payment is applied to a single loan when your account is current

  • First, any accrued, unpaid interest is paid.
  • Second, the payment is applied to the current principal balance.
  • We will advance your payment due date by the number of full payments that are covered by any overpayment — unless you instruct us to do otherwise.*

View a payment example

View a payment example

How a payment is applied to a single loan when your account is past due

  • First, any accrued, unpaid interest is paid. Interest continues to accrue on your account daily. If your payment is past due, more of it will be applied to the interest that has accrued.
  • Second, the payment is applied to the current principal balance.
  • We will advance your payment due date by the number of full payments that are covered by any overpayment — unless you instruct us to do otherwise.*

Remember: If the payment doesn't satisfy the total payment due, including the current amount due and any past due amounts, the amount of interest paid over the life of a loan will increase. Past due amounts may be reported to the consumer reporting agencies.

View a payment example

View a payment example

How a payment is allocated and applied to grouped loans when 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 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 800-4-SALLIE (800-472-5543800-472-5543).

  • The payment is allocated based on the current amount due for each loan in the billing group — unless your payment is mailed with a separate piece of paper instructing us to do otherwise.
  • Once a portion of the payment is allocated to each loan, we apply it in the following manner:
    • First, any accrued, unpaid interest is paid.
    • Second, the payment is applied to the current principal balance.
    • We will advance your payment due date by the number of full payments that are covered by any overpayment — unless you instruct us to do otherwise.*
  • If a monthly payment amount has not been established (for example, if your loans aren't yet in repayment), your payment will be allocated among all of your loans on a prorated basis, first to each loan's outstanding interest and then to the principal.

View a payment example

View a payment example

How a payment is allocated and applied to grouped loans when your account is past due

  • Unless your payment is mailed with a separate piece of paper instructing us to do otherwise, the payment first will be allocated based on each loan's past due amount.
  • Once the past due amounts have been covered, the rest of the payment is allocated based on the current amount due for each loan in the billing group.
  • Once a portion of the payment is allocated to each loan, we apply it in the following manner:
    • First, any accrued, unpaid interest is paid. Interest continues to accrue on your account daily. If your payment is past due, more of it will be applied to the interest that has accrued.
    • Second, the payment is applied to the current principal balance.
    • We will advance your payment due date by the number of full payments that are covered by any overpayment — unless you instruct us to do otherwise.*

Remember: If the payment doesn't satisfy the total payment due, including the current amount due and any past due amounts, the amount of interest paid over the life of a loan will increase. Past due amounts may be reported to the consumer reporting agencies.

View a payment example

View a payment example

Requesting special payment allocations for multiple loans

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.

View a payment example

View a payment example

*How to send overpayment application instructions:

Online: You will be able to choose whether you want any overpayment applied toward future payments to advance your next payment due date.

By check: Enclose your instructions, along with your account number, on a separate piece of paper included with your check.

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Payment Allocations for FFELP, HEAL, and Private Loans owned by third-party lenders

Learn how payments are allocated and applied to accrued, unpaid interest, current principal balances, and any previously assessed fees, if applicable.

How a payment is applied to a single loan when your account is current

  • First, any previously assessed fees are paid.
  • Second, any accrued, unpaid interest is paid.
  • Third, the payment is applied to the current principal balance.
  • We will advance your payment due date by the number of full payments that are covered by any overpayment – unless you instruct us to do otherwise.**

View a payment example

View a payment example

How a payment is applied to a single loan when your account is past due

  • First, any previously assessed fees are paid.
  • Second, any accrued, unpaid interest is paid. Interest continues to accrue on your account daily. If your payment is past due, more of it will be applied to the interest that has accrued.
  • Third, the payment is applied to the current principal balance.
  • We will advance your payment due date by the number of full payments that are covered by any overpayment — unless you instruct us to do otherwise.**

Remember: If the payment doesn't satisfy the total payment due, including the current amount due and any 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.

View a payment example

View a payment example

How a payment is allocated and applied to grouped loans when 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 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 800-4-SALLIE (800-472-5543800-472-5543).

  • The payment is allocated based on the current amount due for each loan in the billing group — unless your payment is mailed with a separate piece of paper instructing us to do otherwise.
  • Once a portion of the payment is allocated to each loan, we apply it in the following manner:
    • First, any previously assessed fees are paid.
    • Second, any accrued, unpaid interest is paid.
    • Third, the payment is applied to the current principal balance.
    • We will advance your payment due date by the number of full payments that are covered by any overpayment — unless you instruct us to do otherwise.**
  • If a monthly payment amount has not been established (for example, if your loans aren't yet in repayment), your payment will be allocated among all of your loans on a prorated basis, first to each loan's outstanding interest and then to the principal.

View a payment example

View a payment example

How a payment is allocated and applied to grouped loans when your account is past due

  • Unless your payment is mailed with a separate piece of paper instructing us to do otherwise, the payment first will be allocated based on each loan's past due amount.
  • Once the past due amounts have been covered, the rest of the payment is allocated based on the current amount due for each loan in the billing group.
  • Once a portion of the payment is allocated to each loan, we apply it in the following manner:
    • First, any previously assessed fees are paid.
    • Second, any accrued, unpaid interest is paid. Interest continues to accrue on your account daily. If your payment is past due, more of it will be applied to the interest that has accrued.
    • Third, the payment is applied to the current principal balance.
    • We will advance your payment due date by the number of full payments that are covered by any overpayment — unless you instruct us to do otherwise.**

Remember: If the payment doesn't satisfy the total payment due, including the current amount due and any 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.

View a payment example

View a payment example

Requesting special payment allocation instructions for multiple loans

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.

View a payment example

View a payment example

**How to send overpayment application instructions:

Online: You will be able to choose whether you want any overpayment applied toward future payments to advance your next payment due date.

By check: Enclose your instructions, along with your account number, on a separate piece of paper included with your check.

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Payment Allocations for Private Loans

Learn how payments are allocated and applied to unpaid interest, current principal, and any unpaid fees, if applicable.

How a payment is applied to a single loan when your account is current

  • First, any unpaid fees are paid.
  • Second, any unpaid interest is paid.
  • Third, the payment is applied to the current principal.
  • We will apply any overpayment to next month's payment — unless you are enrolled in automatic debit or instruct us to do otherwise.***

View a payment example

View a payment example

How a payment is applied to a single loan when your account is past due

  • First, any unpaid fees are paid.
  • Second, any unpaid interest is paid. Interest continues to accrue on your account daily. If your payment is past due, more of it will be applied to the interest that has accrued.
  • Third, the payment is applied to the current principal.
  • We will apply any overpayment to next month's payment — unless you are enrolled in automatic debit or instruct us to do otherwise.***

Remember: If the payment doesn't satisfy the total amount due, including the current amount due and any 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.

View a payment example

View a payment example

How a payment is applied to grouped loans when your account is current

When you have multiple payments for similar loan types, we may group them together in a "loan group" so you will receive one consolidated statement 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 800-4-SALLIE (800-472-5543800-472-5543).

  • The payment is allocated based on the current amount due for each loan in a loan group — unless your payment is mailed with a separate piece of paper instructing us to do otherwise.
  • Once a portion of the payment is allocated to each loan, we apply it in the following manner:
    • First, any unpaid fees are paid.
    • Second, any unpaid interest is paid.
    • Third, the payment is applied to the current principal.
    • Any overpayment will be allocated based on the outstanding loan balances.
    • We will apply any overpayment to next month's payment — unless you are enrolled in automatic debit or instruct us to do otherwise.***

View a payment example

View a payment example

How a payment is applied to grouped loans when your account is past due

  • Unless the monthly payment is mailed with a separate piece of paper instructing us to do otherwise, the payment first will be allocated based on each loan's delinquent amount. Loans with the oldest delinquency will be paid first.
  • Once all the loans are current or at the same delinquency level, the rest of the payment is allocated based on the current amount due for each loan in the loan group.
  • Once a portion of the payment is allocated to each loan, we apply it in the following manner:
    • First, any unpaid fees are paid.
    • Second, any unpaid interest is paid. Interest continues to accrue on your account daily. If your payment is past due, more of it will be applied to the interest that has accrued.
    • Third, the payment is applied to the current principal.
    • Any overpayment will be allocated based on the outstanding loan balances.
    • We will apply any overpayment to next month's payment — unless you are enrolled in automatic debit or instruct us to do otherwise.***

Remember: If the payment doesn't satisfy the total amount due, including the current amount due and any 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.

View a payment example

View a payment example

Requesting special payment allocation instructions for multiple loans

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.

View a payment example

View a payment example

***How to send overpayment application instructions:

  • By check: Enclose your instructions for each loan, along with your loan IDs, on a separate piece of paper included with your check.

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Definitions

Payment allocation
Allocation is how a payment is distributed across multiple loans. You can instruct us to allocate payments differently. 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 fees, then to outstanding interest, and then to principal.

Overpayment
An overpayment is any amount paid in excess of the total due (which includes current amount due plus any past due amounts).