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Student loan discounts
Set up autopay to get an interest rate reduction — and other ways to save.
Student loans typically come with lower rates than other types of personal financing. But lenders often offer discounted rates to specific borrowers. You may qualify for a better deal by signing up for autopay or refinancing with a lender that offers loyalty discounts.
How can I get a discount on my student loans?
The main way to get a discount on your student loans is to set up your account for automatic repayments, also called autopay, auto debit or direct debit. Most federal and private student loan servicers offer a 0.25% rate discount for autopay. Some private student loan providers offer discounts as high as 0.5% for setting up autopay.
If you have private loans, you might be eligible for a loyalty discount if you already use one of their financial products, like a checking account. Discounts can vary depending on the lender and borrower, though it’s typically higher than an autopay discount.
Some lenders might make you choose between an autopay and loyalty discount. Others might allow you to qualify for both.
How to set up autopay on your student loan account
The process for setting up autopay can vary by lender, but here are the steps you generally need to take:
1. Identify your servicer
Your servicer is the company that handles your student loan repayments. In most cases, it’s not the same company as your lender.
If you’re not sure who your servicer is, you can find out by logging in to your Federal Student Aid account for federal loans. For private student loans, contact your lender’s customer service team and ask what servicer it uses.
2. Visit your servicer’s website
You can usually find specific instructions on how to sign up for autopay on your servicer’s website. Often, you need to log in to your account first to access these instructions. If you still can’t figure out how to set up autopay, reach out to customer service.
3. Apply for autopay or link up your bank account
Some servicers like FedLoan require you to fill out an automatic repayment application or enrollment form. Others might allow you to link your bank account automatically — and you might even be able to do it through your servicer’s app. Typically, you need to provide the following information when applying or enrolling:
- Bank account number
- Bank routing number
- Your name as it appears on your bank account
- Your contact information
- How much you want to repay each month — many servicers allow you to make regular additional repayments
- Which student loans you’d like to enroll in autopay
- When you’d like the repayments to apply
4. Keep track of repayments
Regularly monitor your student loan account and bank account each month to make sure your repayments go through correctly. If your bank account doesn’t have enough funds when your repayment is due, you might have to pay a nonsufficient funds fee — typically around $25 or 5% of the repayment due. If you switch bank accounts, make sure to update this information with your servicer.
How much can I save with autopay?
How much you can save varies depending on your loan amount, interest rate and loan term.
Say you had a $30,000 student loan with a 5% APR on a standard repayment plan. Here’s how much you’d pay in interest with and without a 0.25% discount at different loan terms:
| Loan term | Interest payment without autopay | Interest payment with autopay | Total savings |
|---|---|---|---|
| 10 years | $8,183.59 | $7,745.19 | $438.40 |
| 15 years | $12,702.86 | $12,002.92 | $699.94 |
| 20 years | $17,516.81 | $16,528.10 | $988.71 |
| 25 years | $22,613.10 | $21,310.56 | $1,302.54 |
As this table shows, your savings are more significant when you have a longer loan term. However, it doesn’t quite make up for the higher overall cost — it’s still a better deal if you pick the shortest term you can afford.
How to get loyalty discounts
Generally, you can qualify for a loyalty discount from a lender by setting up an account and then refinancing your student loans with that lender. Here’s how:
1. Research providers
Compare rates, terms, eligibility requirements and discounts available from several student loan refinancing providers. You might want to consider asking the following questions:
- How long does the account need to be open? Some lenders might not allow you qualify for the discount right away. Others might require you to be a customer for a fixed period of time.
- Can I qualify for both a loyalty and autopay discount? You might be forced to choose between a loyalty and autopay discount — in which case, it might not be worth it.
- Can I get a comparable rate? Refinancing to qualify for a discount isn’t worth it if you can’t qualify for a rate that’s similar or lower than your current interest rate.
- What are the account requirements? Is there a minimum deposit amount? Are there monthly fees? Are there any income requirements? Make sure the account you’re considering fits with your current financial situation.
2. Prequalify for refinancing, if possible
The best way to ensure you’re eligible for a more competitive rate is to prequalify with a few of your top picks before you apply. Many lenders that offer an online application allow you to prequalify without running a hard credit check, keeping your credit score safe.
Some banks might not offer this option online, though. In that case, you might want to call customer service or stop by your local branch to find out if you can prequalify or ask what rates and terms you might expect.
3. Open an account
Follow the lender’s instructions to open the type of account required to qualify for a loyalty discount. Typically, this involves depositing a certain amount of money into your new bank account. With some lenders, the more you deposit — the higher your discount.
4. Apply for refinancing
After your account is set up, apply for refinancing with the same provider. Often you can apply online, though some more traditional banks might ask for a phone or in-person application. You can learn more about how this process works by reading our guide to student loan refinancing.
Keep in mind that not all lenders work this way. For example, SoFi’s member discount goes to borrowers who already have a loan with the company. It likely isn’t worth taking out another loan to get a small percentage shaved off your interest rate.
How loyalty discounts work with 4 lenders
| Lender | Loyalty discounts | Who qualifies | |
|---|---|---|---|
| SoFi | 0.125% member discount | Borrowers or cosigners who have taken out a loan with SoFi in the past. | |
| Citizens Bank | 0.25% loyalty discount | Borrowers or cosigners with a Citizens Bank:
| Read review |
| Wells Fargo |
Only one discount will apply. |
| Read review |
| First Republic Bank |
Total possible discount: 2.75% |
| Read review |
7 more ways to save on student loans
Aside from autopay and loyalty discounts, there are a few more ways to save on your student loans:
- Refinance for a lower rate. Refinancing with a company that offers a more competitive rate might save you more than simply signing up for autopay. Make sure you aren’t losing any important benefits if you have federal loans, however.
- Make extra payments. Use an app like Sum-sum that rounds up your purchases and puts the extra savings toward your student loan repayments. Or put any bonuses or tax refunds toward your principal to reduce the amount of money that interest adds up on.
- Apply for LRAPs. Loan repayment assistance programs (LRAPs) are partial forgiveness programs, typically available by profession. These can potentially shave thousands of dollars off your loan balance.
- Get a new job. Some employers offer repayment assistance as an employee benefit, especially in the tech industry.
- Change your term. Shortening your term can save you on interest payments over the life of your loan. Lengthening your term can give you lower monthly payments, though you’ll pay more in the long run.
- Refer a friend. Some student loan refinancing companies like CommonBond, Splash Financial and ELFI allow you to earn money by referring a friend to the program — sometimes to the tune of $400.
- Refinance through a referral. Some refinancing companies like ELFI also offer cash to borrowers who refinance through a friend referral. With ELFI, you can earn $100, for example.
Bottom line
Saving on your student loans can be as simple as signing up to have your repayments automatically deducted from your bank account. If you want to be a little more ambitious, you can also refinance with a lender that offers a higher discount like PNC Bank or loyalty discounts.
You can find out more about how it all works by reading our guide to student loans.
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