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How Payments Are Allocated to Your Student Loans

As you make payments on your student loans, it's important to understand how those payments are applied to your loans. Understanding this will help you throughout your student loan journey, as you may find yourself wanting to make payments that are higher or lower than your regular monthly payment amount.

Once a portion of a payment is allocated to a specific loan group, payments are applied to individual loans proportionally to fees first (if applicable)*, then interest, and then to principal. If you are on an Income-Based, Pay As You Earn, or Revised Pay As You Earn repayment plan, payments are applied to interest, then fees (if applicable*), and then to principal.

* Note: The U.S. Department of Education does not assess late or returned payment fees

Paying Your Current Amount Due

Unless you direct your payments to an individual loan or loan group, the default allocation method is followed. Payments are allocated first to any past due loan groups. Once all loan groups are up to date, payments are allocated across loan groups in an active repayment status, in proportion to each loan group’s regular monthly payment amount, less any amount satisfied by extra payment.

You have the option to direct your payments (including partial payments) to individual loans or loan groups, as a one-time or recurring special payment instruction. See special payment instructions for more information.

Paying More Than Your Current Amount Due

Unless you direct your payment to an individual loan or loan group, the default allocation method is followed. After your current amount due is satisfied, your payment will be allocated across loan groups in proportion to each loan group's regular monthly payment amount, or in the case of no payment due (if your loans are not in repayment), in proportion to each loan group’s accrued interest.

You have the option to direct your payments (including partial payments) to individual loans or loan groups, as a one-time or recurring special payment instruction. See special payment instructions for more information.

If you plan to pursue Public Service Loan Forgiveness, visit StudentAid.ed.gov/PublicService for more information regarding prepayments and how they are counted as qualifying payments.

Paying Less Than Your Current Amount Due

Unless you direct your payment to an individual loan or loan group, the default allocation method is followed. Payments are allocated first to any past due loan groups. If you do not pay the current amount due, your payment will be allocated across the loan group(s) from most to least delinquent, in proportion to each loan group’s regular monthly payment amount, less any amount previously paid until each loan group is at the same level of delinquency or all loan groups are up to date.

If you do not pay the current amount due, every loan group may become delinquent, reported to consumer reporting agencies, be subject to a late fee (if applicable)* and could lose eligibility for borrower benefits and repayment incentives. We encourage you to pay as much as you can, because interest accrues on your outstanding principal balance.

You have the option to direct your payments (including partial payments) to individual loans or loan groups, as a one-time or recurring special payment instruction. See special payment instructions for more information.

* Note: The U.S. Department of Education does not assess late or returned payment fees

How Your Due Date Advances

While your loans are in repayment, each time you satisfy a loan group's regular monthly payment amount, we will automatically advance your next payment due date by one month (see example below). If you have partially satisfied a future monthly payment amount, your current amount due, for that billing cycle, will be the portion not satisfied. If you are billed for $0.00 under an income-driven repayment plan, payments will not satisfy future monthly payment amounts.

You can always pay more without penalty, which will reduce your total cost of borrowing and save you money in the long run. If you are not required to make a payment this month, you won’t be considered past due if you don’t make a payment or pay less than your regular monthly payment amount. However, we encourage you to continue paying as much as you can, because interest continues to accrue on your outstanding principal balance.

You also have the option to instruct us to not advance your due date more than one month, as a one-time or recurring special payment instruction. See special payment instructions for more information.

Example: If your amount due in the month of August is $50 and you submit an online payment for $100, your next payment due date will be in October, because the payment amount satisfies two full payments that would have been required for August and September. This does not restrict you from still making a payment in September, if you wish. We encourage you to continue making monthly payments because interest may continue to accrue.

How Payments Made Within 120 Days of Disbursement Are Applied

When you make a payment within 120 days of the date your school disbursed your loan money (the disbursement date), your payment is applied to the original principal balance, which in turn reduces the amount of your loan. There is also a pro-rated reduction of the default/origination fee based on the payment amount that you made. Please note, this excludes loans that are already in repayment and Consolidation loans.

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