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Stafford Loan Discounts

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The following is a basic comparison chart that highlights the loan discounts each lender offers for Stafford Loans. Only lenders that offer Stafford loan discounts are included in this list. More information about Stafford loans can be found in the student loan section of FinAid.

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

The most common Stafford loan discounts include a 0.25% interest rate reduction for having your monthly loan payments direct debited from your bank account (and also often requiring online electronic statement delivery) and a 2% interest rate reduction after 48 months of on-time monthly payments for as long as you continue making on-time payments. The prompt payment interest rate reductions are gradually being replaced with prompt payment principal reductions. Many lenders are also waiving the origination fees on Stafford Loans.

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In this chart, a phrase "after 36 months" should be interpreted as meaning "after the first 36 consecutive monthly payments" unless otherwise specified.

The College Cost Reduction and Access Act of 2007 reduced the subsidies that lenders receive from the federal government. Many lenders have reacted by no longer waiving the default and origination fees or by cutting the value of other loan discounts in half. (This chart only lists when a lender has waived the loan fees. If there is no mention of loan fees it means the lender charges the full amount allowed by law.) Some lenders have been slow to update the discounts published on their web sites, so it is a good idea to confirm the discounts before committing to a loan from any lender.

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

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.

Note: Lenders that intend to sell their loans to the US Department of Education during the 2008-09 academic year will likely limit the back-end discounts to just a 0.25% interest rate reduction for auto-debit.

Lender Direct Debit (ACH/EFT) Discounts On-time Payment Discounts Other Discounts, Notes
Access Group 0.25% interest rate reduction    
AlaskAdvantage 0.25% interest rate reduction Additional 2% interest rate reduction after 48 months. 0% default fee. 0% origination fees. 0.8% interest rate reduction during the in-school period and 0.5% interest rate reduction during the repayment period (AlaskAdvantage General Benefit). 1% interest rate reduction for Alaska Presence Benefit (living or attending school in Alaska).
ALL Student Loan (California) 0.25% interest rate reduction   0% default fee at select guarantors
AMS (833067) 0.25% interest rate reduction    
Arizona Higher Education Loan Authority (AHELA) 0.25% interest rate reduction 1.0% interest rate reduction at repayment. 0% origination fees. 0% default fees. Prompt payment benefits lost if 60 days or more late.
Associated Bank 0.25% interest rate reduction    
Carnegie Student Loans   3.3% principal reduction (based on original principal balance) after 33 months  
Citizens Bank 0.25% unspecified 0% to 1% default fee, depending on guarantor.
CollegeBound Loans 0.25% interest rate reduction 3.3% principal reduction after 30 months 0% default fee. 0% origination fees.
College Foundation Inc. 1.5% interest rate reduction 1% immediate interest rate reduction 0% default fee. 0% origination fees.
College Pay Way 0.25% interest rate reduction 3% principal balance reduction after 1 month. 1% interest rate reduction after 1 month. 0% origination fees.
Collegiate Funding Services (CFS) 0.25% interest rate reduction 1% principal reduction (current principal balance) after 12 months. 1% interest rate reduction after 36 months. 0% default fee. 0% origination fees.
Connecticut Student Loan Foundation 0.25% interest rate reduction 4% principal reduction (based on original loan balance) after 33 months 0% default fee. 0% origination fees.
Discover Student Loans 0.25% interest rate reduction   0% default fee. 0% origination fees. 2% cash back (principal reduction) at graduation.
Edamerica 0.25% 1% principal reduction after 12 months. 1% principal reduction after 24 months. Benefit repair option after 24 months of on-time payments. 0% default fee. 0% origination fees. 1% interest rate reduction for graduation at repayment.
Education Loan Resources 0.25% interest rate reduction   Existing borrowers only.
Fifth Third Bank
808780
As of 3/23/09.
0.25% interest rate reduction    
First National Bank of Omaha   1% interest rate reduction after 24 months. Additional 1% interest rate reduction after 48 months.  
Frost Bank 0.75% interest rate reduction 1% principal reduction after 12 months, 2% principal reduction after 24 months, and 3% principal reduction after 36 months. All principal reductions are based on the current principal balance at the time of the reduction and are independent. 0% origination fees. Forgiveness of up to the final $599 of the loan. (Remainder of loan balance is forgiven when loan account balance is paid down to less than $600.)
Graduate Leverage 0.25% interest rate reduction    
Higher Education Solutions 0.25% interest rate reduction 4.0% principal reduction (based on current principal balance) after 30 months 0% origination fees.
M&I Bank 0.25% interest rate reduction    
Massachusetts Educational Financing Authority (MEFA) 0.5% interest rate reduction 0.5% interest rate reduction after 24 months. Additional 0.5% interest rate reduction after 36 months. Additional 0.5% interest rate reduction after 48 months. 0% default fee. 0% origination fees. 0.25% immediate interest rate reduction at repayment. Benefits are permanent once achieved.
Michigan Higher Education Student Loan Authority (MHESLA) 0.25% interest rate reduction 0.0% interest rate after 36 months. 0% origination fees. The 0.25% interest rate reduction for direct debit is eliminated when the interest rate drops to zero. Benefits are lost if the loans are consolidated. These rates are offered by lenders that sell their loans to MHESLA.
Nellie Mae (829076) 0.25% interest rate reduction    
Nelnet 0.25% interest rate reduction    
New Hampshire Higher Education Loan Corporation (NHHELCO) 0.25% interest rate reduction    
New Mexico Student Loans (NMSL) 0.25% interest rate reduction   0% default fee
Northstar Education Finance 0.25% interest rate reduction    
Regions Bank
(discounts)
0.25% interest rate reduction    
Sallie Mae (802218) 0.25% interest rate reduction    
Southwest Student Services (830630) 0.25% interest rate reduction    
Student Assistance Foundation (SAF) 0.25% interest rate reduction 0.50% principal reduction (based on original loan balance) after 11 months. 1.25% interest rate reduction after 33 months. 0.75% interest rate reduction after 44 months.  
Student Funding Group, LLC 0.25% interest rate reduction   0% default fee. StuFund will use no-fee guarantee agencies when available. Otherwise, a guarantee fee of up to 1.0% will be assessed.
Student Loan Finance Association (833789) 0.25% interest rate reduction    
Student Loan Funding (831455) 0.25% interest rate reduction    
Student Loan Network     Student Loan Network offers the same benefits as Student Loan Xpress.
US Education Finance Corporation 0.25% interest rate reduction 0.5% interest rate reduction at repayment. Principal reduction at repayment equal to the interest that accrued during the first year after disbursement. 0% origination fees. (Provided as a credit at repayment for the amount of origination fees paid by the borrower at disbursement. In some cases part of the credit will be paid one year after entering repayment.) 0% default fee.
Vermont Student Assistance Corporation (VSAC) 0.25% interest rate reduction   0% origination fee. 0% default fee.
Wachovia 0.25% (Pennsylvania Only) 1% immediate principal reduction at repayment. Additional 1% principal reduction after 12 months. Additional 1.5% principal reduction after 24 months. All principal reductions are based on the original principal balance. (In Pennsylvania, a 2% interest rate reduction after 36 months.) 0% origination fees. (0% default fee in Pennsylvania.)
Wells Fargo 0.5% interest rate reduction (if debited from Wells Fargo account). 0.25% interest rate reduction (if debited from a non-Wells Fargo account). 0.5% interest rate reduction after 48 months 0% default fees. 0% origination fees.
Wyoming Student Loan Corporation 0.5% interest rate reduction   0% default fees. 0% origination fees. $100 principal reduction to members of the United States Military, including Reservists and members of the National Guard.

 

 
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