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Payment Information

How Payments Are Applied

Payments are applied first toward any outstanding fees (not applicable for Direct Loans), then outstanding accrued interest and the remainder to the principal balance. Payments received under the Income-Based Repayment Plan will be applied first to interest, then any outstanding fees (not applicable for Direct Loans), and the remainder to the principal balance.

Past due amounts are satisfied first, followed by current due amounts. Payments are distributed proportionally across all loans unless you request otherwise.

Interest accrues daily based on your outstanding balance and the number of days between payments.

Note that the portions of a consolidation loan (unsubsidized or subsidized) must stay evenly paid – one portion may not be more paid ahead or more past due than the other portion. To target payments to one portion of a consolidation loan, use the Submitting Special Payment Instructions below.

How Payments ared Applied
  • How Payments Are Applied to Newly Disbursed Loans

    Although payments aren’t required when you are in school (or your child is in school for Parent PLUS borrowers), payments made toward Direct Loans within 120 days of the loan disbursement may allow you to borrow more aid in the future.

    Here’s how it works:

    Without instruction from you, any payments made within 120 days of the loan’s disbursement go entirely to the principal balance of your loan. They are considered to be a partial or full loan cancellation, which means the payment(s) will be effective the same date your loan was disbursed. It causes your original loan balance to be decreased and any origination fees you were assessed will be adjusted based on the reduced original loan balance. Less interest will accrue on the reduced original loan balance.

    When you view your Payment History, the cancellation payment will display effective the date of the loan’s disbursement.

    Note for Parent PLUS borrowers: To have a payment made within 120 days of the loan’s disbursement applied as a cancellation, your loan(s) need to be on the Parent PLUS Deferment. Parent PLUS borrowers must submit a request to have the payment applied as a cancellation. You may submit the request via one of the following:

    Phone - Contact customer service at 888.866.4352.
    Mail – Include specific instructions on how you want your payment applied. Include the amount, disbursement date and loan type. Send instructions to MOHELA, 633 Spirit Drive, Chesterfield, MO 63005-1243.


Payment Application

Paying Ahead
  • Additional Payments & Paying Ahead

    Paying Ahead means that your current payment has been satisfied and you have paid at least a portion of your future bill.

    There is no maximum limit to the amount you can pay each month. Paying your account ahead of schedule offers many benefits such as:

    • Decreasing your total interest cost
    • Paying your loan off sooner
    • No prepayment penalties

    Each time you satisfy a bill due, we will automatically advance your next payment due date and your billing statement will indicate a payment is not required for that bill. You may still continue to make payments to decrease your total interest cost and pay your loan off sooner. You have the option to select if you want your due date to be advanced on your loans. To request that all payments made over your monthly payment amount be applied to your current bill and not advance your due date, please see Submitting Special Payment Instructions.

    For borrowers working toward Public Service Loan Forgiveness, please note that additional payments may not apply. For borrowers on an income-driven repayment (IDR) plan you may pay ahead, however your due date cannot be advanced beyond your annual income-driven repayment (IDR) anniversary date and the required number of monthly payments must be made to be eligible for forgiveness. Borrowers with $0 payments on an IDR Plan cannot pay ahead to advance their due date.

    Auto Debit

    Please keep in mind your Auto Debit will continue to withdraw your regular amount due each month plus any additional recurring amount you have requested. This occurs even if:

    Your monthly payment amount changes
    You made a payment since your last due date
    You made additional payments and are in a “paid ahead” status

    You may set up or make changes to the additional recurring amount you want withdrawn using Auto Debit, and whether you want it to pay your account ahead. Login, click Auto Debit and complete the steps to modify your Auto Debit enrollment.

    To target the additional recurring amount submit your request via:

    Mail – Include specific instructions on how you want ongoing payments applied. Include the amount, disbursement date, loan type and indicate this is a standing payment instruction. Send instructions to MOHELA, 633 Spirit Drive, Chesterfield, MO 63005-1243.

  • Partial Payments

    Payments less than the required monthly installment amount are applied using the Standard Payment Application. If you submit special payment instructions and select a payment amount that does not satisfy the total amount due, your account may become delinquent. We may report information about your account to consumer reporting agencies. Late payments, missed payments or defaults on your account may be reflected on your credit report.

Submitting Special Payment Instructions

SpecialPaymentInstructions
  • One-Time Payment Instructions

    To request special payment instructions when making an additional or partial payment, submit your request via one of the following:

    • Web – The quickest way to make payments to specific loans is to log into your account. Under the Pay Online screen, select Pay A Different Amount – Target payment to a specific loan or set of loans. If you are mailing an additional payment, please send specific instructions on a separate document on how you would like your payment applied. Allow extra processing time. (This option is not available for targeting a portion of a consolidation loan. Please use phone or mail methods below.)
    • Phone – Speak to a customer service representative at 888.866.4352.
    • Mail – Include specific instructions on how you want your payment applied. Include the amount, disbursement date, loan type and indicate this is a one-time payment instruction. Send instructions to MOHELA, 633 Spirit Drive, Chesterfield, MO 63005-1243.