You are using an outdated and unsupported browser. Please upgrade your browser to improve your experience.
Skip to Header Navigation Skip to Main Navigation Skip to Main Content Skip to Footer

Payment Processing Information

Payment Application

Payment application is the way payments are applied to individual loans. See Overpayments and Underpayments below for information on how payments are allocated when you have multiple loans and are paying more or less than the amount due.

Payments are applied to loans in one of two ways generally based on the terms of your loan agreement:

  • Accrued interest > Late fee (if applicable) > Current principal balance
  • Late fee (if applicable) > Accrued interest > Current principal balance

In some cases, the order of application is based on your repayment plan. For Federal Family Education Loan Program (FFELP) loans on an Income-Based Repayment (IBR) plan, payments are applied first to accrued interest, then to late fees (if applicable), and then to the current principal balance. You may sign in to Account Access to review your loan types and repayment plans.

Because interest accrues daily, the portion of your payment that is applied to interest, rather than to principal, depends on the number of days since your last payment. Learn more about interest.

To review a past payment, sign in to Account Access and select "Payment History" under the "Payment and Billing" tab on the left-hand side. Choose the payment you would like to review and select "View Details" to see how much applied to interest and principal.

Overpayments

Paying more than the Total Due on your loans may reduce the amount of interest you will pay over time, saving you money in the long run.

If you do not provide instructions for your overpayment (see Paying Specific Loans below), it will be allocated in the following manner:

  • To the loans with the highest interest rate. This applies even if you are on an Income-Based Repayment plan with a lower payment amount or even a $0 required payment amount.
    • If more than one loan has the same highest interest rate, the overpayment will go to any unsubsidized or private loan with the highest interest rate.
      • If there is more than one unsubsidized or private loan with the same highest interest rate, the overpayment will be allocated proportionally across such loans based on loan balance.
    • If there are no unsubsidized loans with the highest interest rate, the overpayment will be allocated to subsidized loans with the same highest interest rate proportionally based on the loan balance.

Still have questions? Review the payment processing examples for making overpayments.

Underpayments

If you do not provide instructions for your payment that is less than the Total Due for all loans (see Paying Specific Loans below), your payment will be allocated to your loans in the order of most delinquent to least delinquent. This is intended to reduce the delinquency on your loans to minimize the possibility of default and other consequences.

When all loans on your bill are at the same level of delinquency and your payment is not sufficient to satisfy the total amount due, your payment will be allocated to satisfy individual loans in the following order:

  • To the loans for which delinquency will be credit reported the soonest;
  • Then to loans that may be assessed late fees;
  • Then to loans in order of lowest amount due to highest;
    • If the required payment amounts are the same, the payment will be allocated in the following order:
      • Highest interest rate
      • Unsubsidized or private education loan
      • Highest balance
      • Oldest first disbursement date
      • If more than one loan exists, the amount will be prorated
      • If there are no unsubsidized loans the payment will be allocated to the subsidized loans in the same order.

If you do not satisfy the total amount due, your account will remain past due. However, if you are able to make partial payments that satisfy past due bills, you may be able to reduce the level of delinquency (number of days past due) of your loans. These partial payments can help prevent default and other consequences of delinquency.

It is important to make your payments on time each month, so your loan doesn't become delinquent. Delinquent loans are at risk for credit reporting. If you can't afford to make a payment or your account is already past due, we may be able to help you!

Still have questions? Review the payment processing examples for making underpayments.

Paying Specific Loans

When you pay more or less than the amount due on your loans, you may choose to specify payment amounts to each loan. The easiest way to make payments on specific loans is to pay online using Account Access or our mobile application.

If you sign up for Direct Debit, you also specify any additional amounts to your individual loans. You can modify this Direct Debit selection at any time through Account Access.

Standing Payment Instructions can be set up to allocate both over and under payments going forward. Sign in to Account Access to review the different options.

If you need help making payments on specific loans, you can also call us for assistance and a representative will be happy to guide you through the process.

Standing Payment Instructions

Standing Payment Instructions allow you to provide instructions on how you would like to allocate any future over and under payments, regardless of payment method, unless alternate instructions are provided for an individual payment.

Standing Overpayment Instructions

Standing overpayment instructions will be used when a payment is received without instructions that is more than the amount due. Our website provides all the selections possible, which include options like highest interest rate loan or a percentage to specific loans of your choice.

  • Standing Payment Instructions for overpayments will look at each payment based on the criteria you selected to determine the loan that best matches.
    • When you have a loan that no longer matches the criteria (for example no more unsubsidized or private education loans), then your account will be reviewed for similar criteria but for subsidized loans.
    • If you select a percentage and then pay off one or more of the loans, the allocation will recalculate based on the remaining loans you selected.

Standing Underpayment Instructions

Standing underpayment instructions will be used when a payment is received without instructions that is not enough to satisfy the amount due. Your payment will first be allocated to pay as many outstanding bills in full as possible, until an outstanding bill is reached that cannot be fully satisfied, then the instructions are used to allocate the payment.

  • Standing Payment Instructions for underpayments is not recommended because of the way AES allocates underpayments. As described above, payment allocation for underpayments is performed in a manner that targets loans that will be credit reported the soonest. By selecting an underpayment instruction, credit reporting will not be reviewed for payment allocation. Please be mindful of your underpayment selection and how it may affect your student loans.
    • When you have a loan that no longer matches the criteria (for example no more unsubsidized or private education loans), then your account will be reviewed for similar criteria but for subsidized loans.
    • If you selected the late fee option and it satisfies the amount due on your loans with late fees, any remaining will be allocated as described above in the underpayment section.

When more than one loan matches the criteria for Standing Payment Instructions the payment will be prorated.

Still have questions? Review the Standing Payment Instruction Options for over and underpayments.

Ways to Provide Instructions

  • Standing Payment Instructions – The easiest way is to sign up through Account Access.
    • If you have subsidized and unsubsidized portions of a federal consolidation loan and you would like the funds allocated in a specific manner, you may want to set up Standing Payment Instructions while on Direct Debit. Please contact us so we can discuss the process to request this.
  • One-time instructions – The easiest way is to send us an email but feel free to contact us by faxing or mailing instructions.
Contact Method Contact Details
By email

Sign in to Account Access and use the Contact Us link to send us your instructions through a secure message.

By mail

Send your written instructions to us at our correspondence address:
American Education Services
P.O. Box 2461
Harrisburg, PA 17105-2461

Please send your instructions separately from any payment, check, or money order to ensure your payments apply correctly as you are requesting. Do not write instructions directly on your check, money order, or bill stub so that it isn’t missed when we process your payment!

By fax

Fax instructions to (717) 720-3916.

What to Include in Payment Instructions

Include the following information when providing payment instructions:

  • Your account number.
  • Identification of the applicable loans using the disbursement date and loan type which you can find in Account Access or on your bill.
  • Specific details on how to allocate your payment to specific loans. If your instructions are not clear, we will contact you. We cannot honor requests to modify the manner in which payments are applied, as this is governed by the terms of your loan agreement or your repayment plan (see Payment Application section above).

If you need help with this process, please contact us.

Modifications to Prior Payments

You may contact us if you would like to request a change to the manner in which a prior payment was allocated to your multiple loans.

Debt Management

Is paying more on your student loan your best option? For more information on the most effective ways to pay down debt, budgeting, and your student loans—visit YouCanDealWithIt.com