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How Payments Are Applied

If you provide instructions, MOHELA will follow your instructions unless it would leave your loans delinquent.

  • MOHELA will apply the payment as you request unless it would cause one or more of your loans to become delinquent.

  • If the application of your payment, based on standing payment instructions, would cause one or more loans to become delinquent, MOHELA will notify you that the payment can’t be applied as you requested.

  • MOHELA will store your payment instruction request regardless of if it was for one payment or ongoing.

  • We will notify you if at any time your payment instruction can’t be followed as requested.

  • MOHELA will use your most recent instructions if there is a discrepancy between multiple instructions received.


If no instructions are provided, MOHELA will apply payments in the following manner: (FOR DIRECT AND FEDERALLY OWNED FFEL LOANS ONLY)

  • Payments made matching the total amount due will be applied to the total amount due for each loan.

  • Overpayments made to consolidated loans will automatically go to the unsubsidized portion of the consolidation.

  • Payments made over the required amount will be applied to the highest interest rate loan first. If multiple loans exist at the same rate of interest, MOHELA will apply the overpayment to the unsubsidized loan first, then to the subsidized loan. If loans have the same interest rate and subsidy, the excess amount will be applied in proportion to those loans with a regular monthly payment.

  • If loans have the same interest rate and subsidy, the excess amount will be applied in proportion to those loans with a regular monthly payment.

  • Payments received during an in-school (more than 120 days after a disbursement), grace, deferment, and/or forbearance period are applied to future installments only if your new monthly payment has been disclosed.


If no instructions are provided, MOHELA will apply payments in the following manner: (FOR COMMERCIALLY OWNED FFEL LOANS ONLY)

  • Payments made matching the total amount due will be applied to the total amount due for each loan.

  • Overpayments made to consolidated loans will automatically go to the subsidized and unsubsidized portion of the consolidation.

  • Payments made over the required amount will be applied to all loans.

  • Payments received during an in-school (more than 120 days after a disbursement), grace, deferment, and/or forbearance period are applied to future installments only if your new monthly payment has been disclosed.

FOR CALIFORNIA AND NEW YORK RESIDENTS, PAYMENTS WILL BE APPLIED BASED ON STATE LAWS


How Payments ared Applied

Payments Made Within 120 Days of Disbursement (Loan Cancellation)

Unless instructed otherwise, in most cases payments made within 120 days of when your Direct Loan was disbursed (sent to the school) are applied as a reduction in the "Original Principal". You do not have to pay interest or loan fees on the portion of your loan that is returned within the timeframe described. We will retroactively change your "Original Principal" and adjust any interest and loan fees that apply to the amount of the loan that is returned. The payment source for these payments will show as "Principal Payment" in the payment details of the Payment History. These payments are made effective as of the loans' disbursement date. In addition, your "Original Principal" will be adjusted to reflect the amount originally disbursed less any amounts repaid in the first 120 days of the loan. Please note this excludes consolidation loans.


Payment Application

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:

  • Secure Message or 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

FFELP California State Residents Only: If specific payment application instructions are not received, payment amounts in excess of the amount due will be applied to the loan with the highest interest rate. If multiple loans share the highest interest rate, of those loans, the payment amount will be applied to the loan with the highest balance.

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.

FFELP California State Residents Only: If specific payment application instructions are not received and when there are multiple loans, partial payments will be applied in a manner that minimizes late fees and negative credit reporting.

SpecialPaymentInstructions

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

  • Web – Log into mohela.com to make and target your payments to be applied to a specific loan or set of loans.
     Consolidation Loan: Targeting a payment to the subsidized or unsubsidized portion of the loan is not available online.

  • Phone – Contact customer service at 888.866.4352.

  • Secure Message or Mail – Provide instructions for how to apply the payment. Include the amount, disbursement date, loan type and indicate this is a “one-time payment instruction”. Submit your recurring request via fax (1.866.222.7060) or mail to:

    MOHELA
    633 Spirit Drive
    Chesterfield, MO 63005-1243

To never pay loan(s) ahead when you make additional payments greater than the total amount due (See “Additional Payments & Paying Ahead”), or to provide instructions for how all ongoing payments should be applied, provide instructions for how to apply additional payment.

  • Include the Amount, Disbursement Date, Loan Type and indicate this is a “Standing Payment Instruction”

  • Submit this recurring request via fax (1.866.222.7060)

  • Secure Message or Mail To:

    MOHELA
    633 Spirit Drive
    Chesterfield, MO 63005-1243