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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.
The process for setting up autopay can vary by lender, but here are the steps you generally need to take:
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.
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.
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:
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 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.
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:
Compare rates, terms, eligibility requirements and discounts available from several student loan refinancing providers. You might want to consider asking the following questions:
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.
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.
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.
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 |
Aside from autopay and loyalty discounts, there are a few more ways to save on your student loans:
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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