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Sallie Mae’s New Online Pay System – Pay Extra on your Principal

Filed under: All, Debt Elimination, Finances 

I don’t know when Sallie Mae started this, but I didn’t discover it until February. Previously if you made extra payments beyond your monthly amount due and you wanted it applied to specific loans, you had to make all of your payments by check with written instructions telling them how to apply the extra amounts. Not only is that a pain, but most people I’ve talked to say that Sallie Mae never, ever, ever applies the amount correctly.

Finally, they’ve decided to actually do something useful for those of us who are trying to get out of debt. Previously if you made extra payments online, Sallie Mae just used some fancy math to divide up all of the extra money between all of the loans. This is how it works now:

When you go to enter your online payment, if you enter an amount larger than what is due, it now takes you to a screen asking you if you want to apply the extra amount to your principal balance (yay!) or toward your next payment due (which is pointless, because you’re basically just giving them an interest free loan of your money for a month. Never do this!).

Once you select to apply it toward your principal balance, it then takes you to a screen that shows all of your loans along with their interest rates and tells you exactly how much extra money you are sending.

Then you can type in how much of the money you want to apply to each loan, or leave it blank and let Sallie Mae do something of their “magic” math. My recommendation is that you apply ALL of the extra money to the loan with the largest interest rate, because that’s where it will save you the most money. Unfortunately for me, my loan with the highest interest rate also has the highest balance, so it doesn’t feel like much of a gain, but I know it does the most good over the long run.

Now, this process is trickier for people (like me) who have their payments auto-debited from their account. Since you make the extra payment separate from the amount that is auto-debited, the system isn’t smart enough to recognize it as an extra payment. You have to submit the payment on the same day that your bill is due and the auto-debit transaction occurs and then it will recognize that the sum is in excess of the amount that’s due. It’s a pain to do, but once you get access to that screen, the payment will be processed the way you request.

Now that I have this tool to aid me in my debt payoff, I almost have some positive thoughts about Sallie Mae. Almost.



5 Comments on Sallie Mae’s New Online Pay System – Pay Extra on your Principal

  1. Lindi on Fri, 30th Nov 2012 3:12 PM
  2. Thanks for this info! I’ve been trying for quite sometime to get extra payments applied directly to my principle. I’ll have to give this a try and see how it works. Thank you again. There is very little on the web in the way of a solution on this matter.

  3. Jaclyn Hosier on Thu, 11th Apr 2013 9:18 PM
  4. I have a question, and I’m hoping you’ll help me, because I’ve heard horror stories about trying to call Sallie Mae and their website isn’t helping.

    I’m currently a student and will be for the next two years. I have only have one student loan that I got from Sallie Mae and they have it set up so that I pay $25 a month while I’m in school till I have to make the real payments. For about a year or so, I’ve been paying anywhere between $50~$200 a month trying to get a head start in paying it off, but I’m just now reviewing my Sallie Mae account and they’re holding my money for future payments. So I technically don’t have to pay till August, 6 months from now. I’ve looked up how to pay specifically principle, like this article, and they all mention this option. I’ve been scouring me SM account, but I can’t figure out where to find this option. When I go to make a payment on the site it never comes up! Why? What am I missing? I’ve thought, maybe it’s because my parents co-signed on the loan, so do I have to go through their account? Please help, I’m I’d rather not have to call if I can help it…


  5. Tiffany on Sat, 13th Apr 2013 12:39 PM
  6. Hi Jaclyn!

    It sounds like you have a different kind of loan with different terms than the one I have (I originally took out my loans 9-6 years ago), so I can’t give you any advice about what do you in your situation. The best course of action would be to contact Sallie Mae directly to find out how to get those payment properly applied to their account.

    Their customer service can be reached via email (though they send “canned” responses) or via phone. The biggest downside I have experienced from calling them is long wait times in the evening, but if you can call them during the day, you can hopefully get ahold of them more quickly.

    Sorry I can’t be more helpful, but since I don’t work for Sallie Mae, I can’t tell you how it works for your loans. Good luck!

  7. Chris on Mon, 21st Apr 2014 8:27 AM
  8. I have been struggling with Sallie Mae for years over just paying down the principle balance. I also have spent countless hours on the phone with some rude customer support service rep that continuously tells me that there is no way to do this. I saw your snapshots of the webpage up top. I was able to see this option about a year ago on my account, and it lasted for about a minute. Now, no such luck. Unfortunately, month after month has passed with me paying over my minimum and yes cutting down interested. BUT the overage portion is still being applied to interests! I am tempted to make another hour long phone call, but before I do… Do you still have the option to pay down principle only via online??

    Thank you!!


  9. Tiffany on Sat, 3rd May 2014 4:28 PM
  10. Hi Chris! When I make payments online, any amount that goes over the bill amount I am allowed to designate to whatever loan I want (I apply mine to the loan with the highest interest rate). Sallie Mae will first apply it to any outstanding interest and then the remainder will be applied to the principal balance of the loan.

    I recommend you make you extra payments at the same time you make your regular payments–before any new interest can accrue. Then Sallie Mae should apply the extra payment to your principal balance.

    I hope that helps!

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