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How Payments Are Applied
Payments are applied in the following order:
- Outstanding fees
- Outstanding accrued interest
- Principal
Payment cannot be applied to principal unless all fees and accrued interest are paid.
Please note: Large or extra payments may advance your due date. Subsidized and unsubsidized consolidation loans made on the same date will be adjusted to have the same due date.
Special Payment Allocation Worksheet
Click here to see available Payment Methods
Flexible Repayment Options
The Student Loan People make it easier to repay your student loan with a variety of options including
standard, income-sensitive and extended repayment plans. Your oldest loans are
paid first. You receive annual statements of interest paid, which may help you claim an income tax credit.
Each repayment plan has its own advantages, so you should carefully consider the benefits of each.
There is no prepayment penalty for any of these repayment options.
- Standard Repayment
Equal monthly payments of principal and interest are calculated so that the student loans are repaid
within the standard 10-year term. By not extending the repayment period, you pay your loans off quickly and
minimize the interest you pay. However, your minimum monthly payment may be higher
than with other repayment options.
- Income-Sensitive Repayment
The payment is based on 4% of your gross income with the payment covering at least the monthly
interest. You will have to submit a copy of your pay stub showing your most recent
month’s income or a letter from your employer stating your position and monthly income. If your
Income-Sensitive monthly payment amount is more than your Standard Repayment monthly payment amount,
it will be denied.
Income-Sensitive schedules are set for a year at a time and may be renewed annually up to five years.
Lower monthly payments are possible, and the term of the loan may be extended up to five years to match
the term of the Income-Sensitive repayment plan. You will pay more interest over the life of the loan. This option
requires an application and verification of income.
- PLUS In-School Payment Postponement/Forbearance
This option allows you to postpone interest and principal payments on your PLUS Loan while you or your
student is in school. Interest will continue to accrue if you select the payment postponement option.
Unpaid interest will be capitalized (added to the principal balance) when the postponement period ends.
The in-school payment postponement option is granted for one year at a time. If you would
like this option, complete the In-School Payment Postponement Form
- Extended Repayment
You can choose this option if none of your student loans were made before October 7, 1998, and if
you owe more than $30,000 in federal student loans. You can extend your repayment up to 25 years,
but this will increase the amount of interest you pay. This is an alternative to consolidation,
which can lower your monthly payments (more details).
Updated: 10/07/2008
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