How Are Payments Allocated?
You may have more than one student loan account with Nelnet (account numbers start with D, J, or E). Within each account, your individual loans may be grouped according to the characteristics they have in common. For example, loans of the same type and lender may be in a group together. See How Payments Work for more information.
As you make payments on your student loans, it's important to understand how those payments are allocated across loan groups. Understanding this will help you throughout your student loan journey, as you may find yourself wanting to make payments that are more or less than your current amount due.
View Payment Allocation ExamplesPayment Allocation for Loans in Repayment Status:
You can direct payments (including partial payments) to individual loans or groups as a one-time or recurring special payment instruction. See Special Payment Instructions for more information.
When 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 Repayment Plan, payments are applied to interest, then fees (if applicable)*, and then to principal.
Paying Your Current Amount Due
Unless you direct your payments to an individual loan or loan group, the standard allocation method is as follows. Payments are allocated first to any past due groups. Once all groups are up to date, payments are allocated across groups in an active repayment status, in proportion to each group’s regular monthly payment amount, less any amount already paid for that month.
View ExamplesPaying More Than Your Current Amount Due
Unless you direct your payment to an individual loan or group, the standard allocation method is as follows. After your current amount due is paid, payments are allocated across loans starting with the highest interest rate. Once the loans with the highest interest rate are paid in full, any remaining payment amount will be allocated across the loans with the next highest interest rate. If two or more loans have the same highest interest rate, the payment will be allocated first to the unsubsidized loans and then to the subsidized loans, in proportion to each loan’s regular monthly payment amount.
When you pay more than your current amount due, your due date on loan groups in repayment status will advance by one month each time you satisfy the regular monthly payment amount for that group. Your monthly billing statement will show $0 due for that loan group.
- Since your excess payment will continue to be applied to the loan group starting with the highest interest rate, you will continue to have an amount due for loan groups with lower interest rates.**
- You have the option to request that we not advance your due date when you pay more than your current amount due. See Special Payment Instructions for more information.
- If you want your excess payment to continue to advance the due date of all of your loan groups in repayment status, you can direct your excess payments to all loan groups in repayment status, instead of targeting the loan group(s) with the highest interest rate, as a one-time or recurring special payment instruction. This will help keep the due dates for all loan groups aligned.
Paying Less Than Your Current Amount Due
Unless you direct your payment to an individual loan or loan group, the standard allocation method is as follows. Payments are allocated first to past due groups. If the current amount due is not paid, payments are allocated across group(s) from most to least delinquent, in proportion to each group’s regular monthly payment amount, less any amount already paid for that month until each loan group is at the same level of delinquency or all groups are up to date.
If you do not pay the current amount due, every loan group may become delinquent, be reported to consumer reporting agencies, be subject to late fees (if applicable)*, and may lose eligibility for borrower benefits depending on your lender’s guidelines. We encourage you to pay as much as you can, because interest accrues daily on your outstanding principal balance.
View ExamplesDue Date Advancement for Loans in Repayment Status
While in repayment, each time you pay a loan group's regular monthly payment amount, we will advance your due date by one month (see example below). If you make a partial payment, your current amount due will be reduced by the amount already paid. If your current amount due on an Income-Driven Repayment Plan is $0, prepayments will not advance your due date.
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 even if your current amount due is $0 because interest may continue to accrue on your outstanding principal balance.
To maintain eligibility for borrower benefits and repayment incentives, you may be required to continue making monthly payments even if your current amount due is $0. For more information about prepayments and how they qualify toward benefits, repayment incentives, or loan forgiveness you may be eligible for, contact us.
If you plan to pursue Public Service Loan Forgiveness for Direct Loans, visit StudentAid.ed.gov/PublicService for more information about prepayments and how a paid-ahead status impacts qualifying payments.
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. By selecting this option, your due date will only advance a single month, even though you have paid more than the current amount due. If your account is already paid ahead, selecting this option will keep your due date from advancing further, or contact us if you want your regular monthly payment amount to be due the next month. See Special Payment Instructions for more information.
Example: If your current amount due in August is $50 and you make an online payment for $100, your next payment will be due in October, because $100 pays the amount due in 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 on your outstanding principal balance.
This example is meant only as a guide. We do not guarantee it will apply to your specific circumstances. If you have questions about your loans, please contact us.
Payment Allocation for Loans Not in Repayment Status:
Unless you direct your payment to an individual loan or loan group, the standard allocation method is as follows.
If none of your loans are in repayment status, payments are allocated across loans starting with the highest interest rate, unless the payment is made within 120 days of disbursement (see below). Once the loans with the highest interest rate are paid in full, any remaining payment amount will be allocated across the loans with the next highest interest rate. If two or more loans have the same highest interest rate, the payment will be allocated first to the unsubsidized loans and then to the subsidized loans, in proportion to each loan’s regular monthly payment amount.
Payments Made Within 120 Days of Disbursement
When you make a payment within 120 days of the date your school disbursed your loan funds (the disbursement date), your payment is first applied to the original principal balance of that disbursement(s) which, in turn, reduces the amount of your loan. There is also a prorated reduction of the default/origination fee based on your payment amount. Please note, this excludes loans that are already in repayment status and consolidation loans. If a payment made within 120 days of a disbursement pays the original principal balance of that loan’s disbursement amount in full, any additional payment amount will be allocated according to the standard allocation method, as noted above.
*The U.S. Department of Education does not assess late or returned payment fees.
**If you are enrolled in auto debit, payments will be deducted each month that your loans are in an active repayment status as noted on your monthly billing statement, even if you have paid more than the current amount due (known as being paid ahead). Payments will not auto debit for loans that are paid ahead while on an Income-Based, Income-Contingent, Pay As You Earn, or Saving on a Valuable Education (SAVE, formerly the REPAYE Plan) Repayment Plan, or in a Reduced Payment Forbearance. If all of your loans are in one of these repayment plans, only your regular monthly payment amount as noted on your monthly billing statement will be automatically deducted.