Sallie Mae: How To Apply Payment To Principal

Few things are as frustrating as trying to get Sallie Mae to properly apply your extra student loan payments. In fact, it seems as if the system is stacked against you in terms of paying down that principal. However, it can be done!

What You Don’t Know About Student Loan Interest

I’m not sure how I got this long out of school before learning this, but today I learned something about student loan interest that I did not know. In fact, it might be surprising to you as well.

Interest accrues daily on your student loans.

That’s right – every day your student loan balance increases. That makes it kind of difficult to get ahead on them, huh? This is why it is so hard to get your principal balance down.

Think about it – if your extra payments are going towards the interest that is charged daily, then you are never working to reduce that amount of daily interest because your principal balance is not changing any with those extra payments.

So, let’s see how you can change that. I sure know that I want to!

How Sallie Mae Applies Your Extra Payments

When you make an extra payment on your loan with Sallie Mae, they are under no obligation to pay down your principal balance first. In fact, it is not in their best interest to do so.

In fact, they hit your late fees (if you have any outstanding) and interest first!

Under FAQs on their website, it says:

When we receive a payment, we usually apply it first to late fees (if any), followed by unpaid accrued interest, and then to the loan principal balance. (The order of the application may vary depending on the requirements of your Promissory Note.) Interest on your loan(s) accrues daily, so the total amount of interest you’ll pay during repayment can vary depending on when your payments are received. It’s to your advantage to send your payments on time, or early, to avoid paying additional interest and late fees.

But fear not! It is possible to make a payment that is applied first to the principal balance.

Making Extra Payments To Principal Balance With Sallie Mae

It is no secret that Sallie Mae does not make it easy to find out how to pay down your principal student loan balance. But, it is actually quite simple.

Step 1 – Make your payments on time each month not matter what. Even if they advance your payment date because you paid extra the month before – pay them EVERY single month.

Step 2 – Pay more than the minimum monthly payment. The extra will be applied to principal.

It used to be that you had to physically mail in a principal payment to Sallie Mae to get them to take it and apply it the way that you wanted. And half the time they still didn’t apply it to principal!

Now though, this method works. And don’t worry if they advance your due date into the future. Just keep paying each month and you will start to see that principal balance go down with your extra payments.

I have also heard that if you are making an online payment is more than double your minimum monthly payment that you will be asked if you want the due date advanced or if you want it to be applied to principal.

If you get that message, just remember to click that you want it applied to principal.




One thought on “Sallie Mae: How To Apply Payment To Principal

  1. This is obviously an old post, but it is something I see erroneously EVERYWHERE and it is frustrating. Advancing your payment due date does NOTHING to influence how a payment is applied. Payments are always applied: late fees, interest, then principal. Advancing the due date simply removes the responsibility for payments until the next payment due date. That’s it. If you make regular payments every month, on time, your interest will always remain low and your principal will always decrease faster no matter WHEN your due date is.

    A better solution, that you fail to address is automatic debit. I was enrolled in automatic debit for 10 years for my loans with AES. My payment was applied every month, no matter what, at the same time. When I paid my loan off in October 2014, I had a next payment due date of 2016! So, clearly, advancing the due date has no influence over the principal balance, it’s just that: a DUE DATE. So get the correct info out there so that we have more people better informed about how their payments are applied and how best to make payments on their principal balance with less hassle for themselves. It’s about personal responsbility, not the fault of a servicer.

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