Did you know that approximately 70% of students who are eligible for student loan discounts lose out on those discounts within the first year of loan repayment? Or that only about 20% of those students eligible to receive a discount for making their payments on time, actually do so?
Yes, it’s in the fine print. Let me walk you through some of the best tips on how to get those student loan discounts.
Make your first payment on time! Did you know that most students who lose a loan discount do so by missing their very first payment? Yes, that’s right! They simply “blow-off” their very first student loan payment. That lost one-time loan discount, based on a $10,000 loan @ 6.8% and a 10 year term, can be equivalent to $380.17 or even more!
Make your next 35 – 47 payments on time! Lenders often will provide you with a loan principal reduction if you have made 36 – 48 payments on time. On a 10 year term of a $10,000 loan, that savings amount could be approximately $703.44 or even more!
Use the lenders or banks direct payment option! Lenders will often grant to you a 0.25% interest rate reduction during the months you authorize a direct withdrawal from your checking or savings account. Take full advantage of this discount starting with your very first student loan repayment.
The bank will make your last six monthly payments! Yes, simply by making all of your monthly payments on time, you may be eligible to have your final six note payments waived resulting in a $690.48 savings or more on that 10 year loan.
Get your interest rate reduced by 2%! Some lenders will reward your prompt payments by giving you up to a 2% interest rate reduction on your outstanding loan balance, after 36 – 48 consecutive monthly payments. Over the last six years of a 10 year loan term, that could equate in a $527.79 or more savings!
Check with you student loan advisor! Some colleges have negotiated certain discounts for their students. Be sure to ASK your student loan advisor for more information.
Don’t consolidate your loans the first year! You may lose out on a number of student loan discounts when you consolidate your loans. Avoid the temptation to consolidate unless you have read and understand all of the discounts you may forfeit. You can’t blame the lender for withdrawing incentives to do business with them if you jump to a different lender.
Fees can be waived! On The Stafford Student Loan, many lenders will agree to waive a 1% loan guarantee as well as other loan origination fees when you use their direct debit method of loan repayment. The lender may also require you to receive your loan statements electronically.
1.5% rebate after 12 on time payments! The US Department of Education may offer to you a 1.5% rebate after your first 12 consecutive on time payments. That rebate is applied directly to your outstanding loan balance. Be sure to ask your loan advisor for more details.
Ask about a graduation credit! Yes, simply by finishing college you may qualify for a one-time 0.5% credit (basically a reduction of the outstanding balance) as you begin to make your loan payments.
A forbearance or loan deferment can cost you! Your student loan discounts may be adversely affected when your loan goes into forbearance or is deferred. Check with your student loan advisor for more information.
Rebates or discounts that must be repaid! Your original loan document likely has provisions that if you refinance or consolidate your student loans prior to their term, or if the outstanding refinancing loan balance is more than $600, you may be required to repay rebates and/or discounts that have been paid to you. Simply be aware that this could occur.
Minimum loan balances to qualify for discounts or rebates! Check with your lending agency to find out the minimum loan balance that is required for you to qualify for rebates or discounts. The very best discounts are often reserved for the students who borrow the most!
Some lenders require that you request you rebates or discounts in writing. Read your loan documents. Different lenders have unusual definitions of what is considered an “on-time” payment. And, you might want to ask if any discount offered is complied using the original loan amount or the amount outstanding at the time the discount is applied (usually much less).
The very best advice I can give to you is to make your student loan payments on time, every time. You have so much to lose and yet so much to gain!