Get lower college loan rates for good behavior.

Navigation: Main page

Author: Bigda, Carolyn

3 Tips

TIP 2 Get lower college loan rates for good behavior

Lenders have long given rewards to student-loan borrowers for on-time payments. But usually you have to pay on time for 36 to 48 months just to be eligible. Now some lenders are making it easier. Example: On Stafford Loans issued after July 1, Bank of America cuts the principal by 3% for on-time payments, one point a year. Miss a payment during the first year and you're still eligible for the point drop in the second and third.

• WHAT TO DO Sign up for automatic payments, which most lenders reward with a 0.25% rate cut. When shopping for a lender, look for instant benefits, recommends Mark Kantrowitz of FinAid.org. Wachovia and Bank of America, for instance, automatically reduce your principal by 1% just for starting to repay.

~~~~~~~~

By Carolyn Bigda