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Consolidation Loan Discounts

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The following is a list of lenders that provide Consolidation Loans. It includes a basic comparison chart that highlights the loan discounts offered by each lender. Only consolidators that offer loan discounts are included in this list. More information about consolidation loans can be found in the consolidation loan and private consolidation loan sections of FinAid.

The lenders are listed in alphabetical order. No significance should be inferred from the order in which the lenders are listed.

Many lenders offer loan discounts to encourage borrowers to consolidate their loans with them. With the repeal of the single holder rule, borrowers now have a choice of consolidation lenders.

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The most common loan discounts include a 0.25% interest rate reduction for having your monthly loan payments direct debited from your bank account and a 1% interest rate reduction after 36 months of on-time monthly payments for as long as you continue making on-time payments. (However, with the changes in lender subsidies introduced by College Cost Reduction and Access Act of 2007, many lenders are eliminating the 1% rate reduction after 36 months on new loans originated on or after October 1, 2007.)

Note, however, that if you are late with a single monthly payment or obtain a deferment or forbearance, you lose the interest rate reduction permanently. Less than 10% of borrowers succeed in obtaining the full benefit of an on-time payment discount. (Even borrowers who sign up for automatic direct debit of the monthly payments can miss a payment if they have insufficient funds in their account.)

We recommend focusing on the discounts that you can't lose, such as discounts for signing up for direct debit of the monthly payments. Next look for discounts that are more immediate in nature, such as those that offer a reduction in principal or a rebate of the loan fees. When a repayment incentive requires on-time payments, prefer those that involve a shorter time period before you can qualify for the discount. A discount that is suspended for a short time period after you are late with a payment is better than one that terminates after a single late payment.

Be sure to ask the lender whether there is a minimum balance to obtain the discounts. Often the discounts require a loan balance that is higher than the minimum balance required to consolidate. Also ask what is considered an "on-time" payment; usually this is within 10-15 days of the due date.

These lenders all reserve the right to change or discontinue their loan discount programs at any time without notice. You should always check the lender's web site for the latest information on their borrower benefit programs.

See Student Loan Discounts for other important caveats on the hidden gotchas of loan discount programs and tips on identifying the best loan discount programs.

Lender Direct Debit (ACH/EFT) Discounts On-time Payment Discounts Other Discounts, Notes
Collegiate Risk Management Inc. (CRM) 0.25% interest rate reduction 1% interest rate reduction after 36 months $7,500 minimum
EduCare Financial 0.25% interest rate reduction 1% interest rate reduction after 36 months  
Georgia Student Finance Commission (GSFC) 0.50% interest rate reduction   $3,500 minimum
GradLoans.com 0.50% interest rate reduction ($40,000 minimum); 0.25% otherwise 1.0% interest rate reduction after 24 months ($40,000 minimum); 1.0% rate reduction after 36 months otherwise $7,500
U.S. Department of Education
Federal Direct Consolidation Loan Program
0.25% interest rate reduction    
VFI (Vista Financial Inc.) 0.25% interest rate reduction 1% interest rate reduction after 36 months $10,000 minimum

 

 
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