Understand payment allocation and application

Payment allocation
Payment allocation is how a payment is spread 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

To change your payment allocation method, please complete this form

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 – This is the default allocation method.

  • 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.

Prorated by Current Balance 

  • If your payment satisfies both the Past Due Amount and Current Amount Due, the remaining payment amount will be prorated based on each loan’s Current Balance. 
  • If no payment is due, your payment will be prorated based on each loan’s Current Balance. 

View this overpayment example

Lowest Current Balance 

  • If your payment satisfies both the Past Due Amount and Current Amount Due, the remaining payment amount will be allocated to the loan with the lowest Current Balance. 
  • If no payment is due, your payment will be allocated to the loan with the lowest Current Balance. 

View this overpayment example

Highest Current Balance 

  • If your payment satisfies both the Past Due Amount and Current Amount Due, 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 Current Balance. 

View this overpayment example

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 – This is the default allocation method.

  • 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 this underpayment example

Prorated by Amount Due

  • 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 prorated according to each loan’s remaining Past Due Amount within that group delinquency level. 
  • If your payment satisfies the Past Due Amount, the remaining payment amount will be prorated based on each loan’s Current Amount Due. 

View this 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.

Apple, iPhone, Apple Watch, Siri, and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.

Android, Google Play and the Google Play logo are trademarks of Google Inc.