Got this one by email today:
One thing I found while looking into my student loans is using autopay through federal loan servicers provides a 0.25% reduced interest rate. Reading all the information I could find on my servicer’s (Great Lakes) website about this, it appears that students currently in school can make the minimum monthly payment ($5 per account) and qualify. Making this minimum payment does not remove them from deferment and actually lowers the amount borrowed because the monthly payment is subtracted from the loan principle when made within 120 days of loan disbursement. I have not seen any such suggestion from what I have read on your blog and others and was wondering if this is really possible for current students?
Although it is a small benefit, I calculated that by making the $10 payment (two accounts) each month would save me about $1500 in interest over the course of my next three years of medical school via the reduced interest rate (will obviously vary by person but significant enough for me unfortunately going to a high cost medical school). It is not a lot of money in the grand scheme of things but better $1500 in my pocket than the federal government’s.
I would appreciate your input on this as to whether current students are truly eligible for the reduced interest rate. If so, I thought it might be worthwhile information to include somewhere on your site for current students looking to reduce their future debt. Again, thank you for your blog and the time you give to everyone using it.
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