Information for borrowers who consolidated during the Repayment Incentive Program (10/1/00 - 9/30/01)

As an incentive to encourage timely student loan repayments, all borrowers who consolidated eligible student loans into the Federal Direct Consolidation Loan Program between October 1, 2000, and September 30, 2001 received an immediate interest rate reduction of 0.8 percent. To keep this benefit beyond the initial 12-month period, borrowers must make the first 12 monthly payments on time. The 0.8 percent rate reduction will become permanent once these first 12 payments are made on time.
For example, if your Direct Consolidation Loan interest rate is 8.25 percent, your interest rate drops to 7.45 percent. If you make your first 12 payments on time, you keep that interest rate and could save more than $400 for every $10,000 borrowed over a standard 10-year term.