7 CFR § 765.154
Distribution of payments
July 6, 2020
The Agency applies both regular and extra payments to each loan in the following order, as applicable:
(a) Recoverable costs and protective advances plus interest;
(b) Deferred non-capitalized interest;
(c) Accrued deferred interest;
(d) Interest accrued to date of payment; and
(e) Loan principal.