Note that the situation for student loans has changed due to the impact of the coronavirus outbreak and relief efforts from the government, student loan lenders and others. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.
* * *
Automating your finances can be a great way to stay on top of due dates and never worry about missing a loan payment. But even if you’ve set most of your bills on autopilot, you’ll likely find there’s more to consider when you automate your student loan payments.
Though there are opportunities to save money by enrolling in student loan automatic payments, the process can be confusing and do more harm than good if you don’t know what to expect.
Whether you’re seeking a Navient autopay discount or an interest rate reduction from another loan servicer, this guide will walk you through the process:
- What to consider before you start student loan autopay
- Pros and cons of automating student loan payments
- How to sign up to automate student loan payments
- What to remember about autopay
- Plus: How to pay off your loan faster with weekly payments
- Plus: How to save interest costs with student loan refinancing
Before you automate your student loan payments, make sure your repayment plan is practical for your current financial situation. Otherwise, you could be committing to a monthly payment that you cannot always afford.
Options may be more limited for private student loans, but federal student loans offer several income-driven repayment plans that can limit your monthly repayment to a set percentage of your disposable income, making autopay more practical.
Pros of student loan autopay
- Never miss a payment. You’ll never forget to make your student loan payments, making it far less likely that you’ll end up in delinquency or default. As with any other automatic debit process, your student loan payment will be deducted from your bank account on the same day every month.
- Save on interest. When you automate student loan payments, most loan servicers provide an interest rate reduction of 0.25 percentage points. This may not sound like much, but it could add up to hundreds of dollars of savings over the life of your loan. For example, on a $20,000 loan, dropping from 5% to 4.75% interest would save you $293 over 10 years, according to our loan payment calculator.
- Make extra payments. You can set up an auto-debit amount that’s greater than your monthly minimum. This is an excellent way to pay off your student loan faster. Granted, you could always send in a little extra if you decide to pay by check every month, but it’s easier to talk yourself out of it that way. When it’s already set up through autopay, you’re committed.
Cons of student loan autopay
- There’s overdraft risk. You’ll need to make sure you have the money in your account to cover the autopay amount every month. If not, you’ll be looking at an overdraft or insufficient funds fee through your bank, not to mention a late payment.
- There’s less flexibility. The automatic payment will come out of your account every month, even if you mail in an extra payment that exceeds your monthly minimum. For instance, if your monthly minimum payment is $250 and you want to pay an extra $50 that month, don’t mail a check for $300 assuming it will stop the automated $250 from being deducted from your bank account.
- It’s tough to cancel. If you want to cancel your automated student loan payment, you will likely have to do so in writing and well before you want the payment stopped. For instance, if you have a FedLoan Servicing payment, the servicer will need up to 10 business days to process a written request for cancellation. Other servicers may have similar policies, so make sure to check.
As you likely know, your student loan servicer is the company that manages your loan for the lender. It’s this servicer you turn to with questions and concerns about your loan, including automating student loan payments.
You can call the servicer directly with your questions, although you’ll often find that the information you need is on its website, sometimes including a user-friendly process for setting things up. Expect this set-up process to include a provision of your bank account information, including your routing number and account number.
Federal student loans
The federal government uses 10 different federal student loan servicers, all of which offer the automatic payment option.
Let’s say you want to receive a Navient autopay discount, for example.
More information for each servicer is provided below, as well as phone numbers if you have a question or need help troubleshooting the process.
- FedLoan Servicing (PHEAA), 1-800-699-2908
- Great Lakes Educational Loan Services, 1-800-236-4300
- Navient, 1-800-722-1300
- Nelnet, 1-888-486-4722
- Cornerstone, 1-800-663-1662
- HESC/EdFinancial, 1-855-337-6884
- Granite State (GSM&R), 1-888-556-0022
- MOHELA, 1-888-866-4352
- OSLA Servicing, 1-866-264-9762
- ECSI, 1-866-621-3115
With that said, the Education Department signed contracts in June 2020 to bring new federal loan servicers into the fold. The expected emergence of its long-awaited NextGen platform is sure to shake up federal loan servicing as soon as 2021.
Navient autopay discount: a case study
Every federal loan servicer is a little bit different (at least until NextGen comes to fruition), but let’s run through an example.
If you’re seeking a Navient autopay discount, you would take the following steps:
- Log into your Navient account
- Select “Auto pay” from the menu options
- Enter your desired payment amount (at least the minimum)
You’ll likely also need to review Navient’s auto-pay terms and give your consent.
Though it won’t increase your Navient autopay discount, you could also up your payment amount or automatically allocate extra payments to one or more of your loans with this servicer. Learn about the benefit of weekly payments, for example, below.
Private student loans
While there are many federal student loan benefits that don’t exist with private student loans, fortunately, autopay discounts aren’t one of them. Many private loans come with this perk, including some from big names such as Sallie Mae and College Ave.
In fact, you might even find autopay rate reductions that are more generous than what’s offered by the federal government. PNC, for instance, will offer a 0.5% discount if you automate repayment.
If you have private loans, check with your lender for its policies.
If you don’t know for sure whether you have federal loans, private loans or a combination — or if you’re just not clear on whom to contact — then check out our guide to tracking down your student loan servicer.
Meanwhile, even if you switch to autopay, make sure to keep tabs on your monthly deductions. While one of the biggest benefits of automatic payments is dependability, never take it for granted. It’s a good idea to check your account every month to be sure your student loan payments, as well as any other automatic debits, are being deducted according to schedule.
Another way to pay less interest on your student loans is to make weekly payments (if your loan servicer allows it). Switching from monthly to weekly means you’ll pay a little bit extra over the course of a year (since some months will include five payments instead of four) — but it also means you’ll pay down your loans more quickly and cut the interest charges you’re racking up.
Here’s how it works: Let’s say you pay $200 a month on your student loan. Over the course of 12 months, that adds up to $2,400. Now think about your monthly payment in weekly increments — that’s $50 per week since most months have four weeks.
If you multiply $50 by 52 weeks, you’ll end up paying $2,600 per year, sneaking in an extra $200 toward your debt. That’s an entire month’s payment.
If it works better in your situation, you could also investigate the benefit of bi-weekly student loan payments.
Using the interest rate reduction that comes with automatic debit and making weekly payments are two ways to save a little bit of money. Another option is to refinance your student loans, which could net you a lower interest rate and save you a bundle over the life of the loan.
Student loan refinancing can also make your monthly payments more manageable if you take out a loan with a longer term than what you have left on your current repayment.
Note, however, that a longer repayment means you’ll pay more interest over time. Also, if some or all of your loans are federal, refinancing will permanently turn them private, meaning you’ll yield some protections (including income-driven repayment plans and certain student loan forgiveness options). Then again, if you expect a smooth repayment, you might not need those protections and can focus instead on saving the most money.
Be aware that private lenders also tend to have strict qualification requirements for student loan refinancing, including good credit and a stable income. This means you might need a cosigner to get approved to refinance.
Andrew Pentis and Emily Long contributed to this report.
Interested in refinancing student loans?Here are the top 9 lenders of 2022!
|Lender||Variable APR||Eligible Degrees|
|1.74% – 8.70%1||Undergrad & Graduate|
|1.74% – 7.99%2||Undergrad & Graduate|
|1.74% – 7.99%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|1.74% – 7.99%5||Undergrad & Graduate|
|2.05% – 5.25%6||Undergrad & Graduate|
|1.86% – 6.01%||Undergrad |
|N/A7||Undergrad & Graduate|
|1.99% – 8.38%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 4, 2022.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Student Loan Refinance Interest Rate Disclosure Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Let us know if you have any questions and feel free to reach out directly to our team.
3 Important Disclosures for SoFi.
Fixed rates range from 3.49% APR to 7.99% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for Navient.
6 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 5/17/2022 student loan refinancing rates range from 2.05% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.93% Fixed APR with AutoPay.
7 Important Disclosures for PenFed.
Fixed Rate Loan Terms: 5 years/60 monthly payments, 8 years/96 monthly payments, 12 years/144 monthly payments or 15 years/180 monthly payments. Annual Percentage Rate is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed rates range from 3.29% to 5.43% APR. Rates are subject to change without notice. Fixed APR: Fixed rates will not change during the term. This rate is expressed as an APR. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
8 Important Disclosures for CitizensBank.
Education Refinance Loan Rate Disclosure: Variable interest rates range from 1.99%-8.38% (1.99%-8.38% APR). Fixed interest rates range from 2.99%-8.63% (2.99%-8.63% APR).
IS Variable Rate Disclosure: Variable Rates advertised are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2021, the one-month LIBOR rate is 0.09%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. Your final variable rate may be based upon the 30-day average SOFR index, as published by the Federal Reserve Bank of New York. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%.
ERL Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of May 1, 2022, the 30-day average SOFR index is 0.29%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer. Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.