Tips to Repay Your Direct Loan
1. Save time and money with electronic payments. Electronic debiting is a service that allows your bank to deduct your monthly Direct loan payments automatically from your checking or savings account. If you pay by electronic debiting, your loan interest rate is reduced by one quarter of one percent (0.25%). If you wish to enroll in this service, complete an Electronic Debit Account application available online through your loan servicer. Just be sure you have the funds in your bank account to cover the withdrawal. Hold on to your bank account statements as proof that you paid your monthly bill. If you have any questions, call your loan servicer.
2. Pay down your principal. You are always able to make additional payments on your federal loan to shorten the length of the repayment term and to reduce the total amount of interest paid over the life of the loan. Any amount paid above the scheduled monthly payment will be automatically applied to the subsidized loan principal. You can also enclose a note with your check indicating what you want done with the extra funds. If you have both subsidized and unsubsidized loans, apply any additional funds to the unsubsidized portion before you pay down the subsidized portion. This will reduce future interest charges if you have a deferment sometime in the future. If you choose to pay by electronic debiting (see #1 above), you may still pay down your loan principal by sending in a separate payment by check and indicating how you want it applied.
3. Check your loan activity via your loan servicer's website. At your loan servicer's website you may review your loan payment history, loan balance, interest rates, and payoff amount. You may update your address and phone, estimate payments, change your payment due date, compare repayment plans, and change your repayment plan. You may also print or submit forms to arrange for electronic payments and to request a deferment or forbearance. You should periodically check your loan account, especially if you are applying additional funds to the principal, to verify payments and changes you may have requested, or if you have requested a deferment or forbearance.
4. Consider loan consolidation. You may make loan repayment more convenient if you consolidate one or all of your federal loans into one Direct consolidation loan. You maintain most of the benefits of a Direct loan except that your Direct consolidation loan has a fixed interest rate and a longer repayment term. Consolidating any variable interest rate loans while the interest rates are low will mean a lower fixed interest rate for the life of the loan and lower monthly payments. To apply, call 800.557.7392 for a paper application or visit StudentAid.gov to complete an online application. You will need to log in using your FSA ID. If you only have Direct loans you may apply over the phone at 800.557.7392 and choose the option to speak with a representative.