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.

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.


How a payment is applied to a single loan that is current

  • First, any Unpaid Fees are paid.
  • Second, any Unpaid Interest is paid.
  • Third, the remaining payment amount is applied to the Current Principal.
  • Unless you make your student loan payments through automatic debit or instruct us otherwise, the overpayment amount will reduce the Current Amount Due on your next billing statement(s).

View a payment example

How a payment is applied to a single loan that is past due

  • First, any Unpaid Fees are paid.
  • Second, any Unpaid Interest is paid.
  • Third, the remaining payment amount is applied to the Current Principal.
  • Unless you make your student loan payments through automatic debit or instruct us otherwise, the overpayment amount will reduce the Current Amount Due on your next billing statement(s).

View a payment example

Remember: If the payment doesn’t satisfy the Current Amount Due and Past Due Amount, a late fee may be assessed, and the Total Loan Cost may increase. Refer to the front of the billing statement for the dates to avoid late fees. If the loan is delinquent, it may be reported to the consumer reporting agencies.


How a payment is allocated and applied to grouped loans that are current

If a borrower has multiple loans, we may automatically put them in a loan group. Each loan group has its own billing statement that shows all of the loans within that group. The borrower may request to have loans ungrouped at any time during the life of the loan. If you prefer a separate billing statement for each loan, please call us at 800-472-5543 (800-4-SALLIE). Loans for cosigners are not put in a loan group and cosigners receive a separate billing statement for each cosigned loan.

  • The payment is allocated based on the Current Amount Due for each loan in a loan group—unless your student loan 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 remaining payment amount is applied to the Current Principal.
    • Unless you make your student loan payments through automatic debit or instruct us otherwise, the overpayment amount will reduce the Current Amount Due on your next billing statement(s).

View a payment example

How a payment is allocated and applied to grouped loans that are past due

If your payment is less than the Past Due Amount, loans at the oldest delinquency level will be paid first. 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. This results in the delinquency level being the same for each loan in the group. If you make an overpayment, the remaining payment amount will be prorated based on each loan's Current Balance as of the date the payment is received less the Past Due Amount and Current Amount Due paid.

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 remaining payment amount is applied to the Current Principal.
  • Unless you make your student loan payments through automatic debit or instruct us otherwise, the overpayment amount will reduce the Current Amount Due on your next billing statement(s).

View a payment example

Remember: If the payment doesn’t satisfy the Current Amount Due and Past Due Amount, a late fee may be assessed, and the Total Loan Cost may increase. Refer to the front of the billing statement for the dates to avoid late fees. If the loan is delinquent, it may be reported to the consumer reporting agencies.


Request special payment allocation instructions for multiple loans

You can instruct us to allocate student loan payments differently, if you pay by mail. Clearly write your instructions on a separate piece of paper, including any applicable 16-digit Loan Number and the amount you want allocated to each loan. Once we allocate a payment to a specific loan or loans, 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. You may not designate a different method for applying payments. We cannot process instructions written on the check or remittance slip. Please note, third-party bill-pay services do not allow you to provide instructions. If you are a borrower using a third-party bill-pay service and would like to allocate your payment differently, please call Customer Service at 800-472-5543 (800-4-SALLIE) to have your loans ungrouped.


View a payment example

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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