Five Things About Student Loan Borrower Rewards
Many lenders offer incentives to encourage borrowers to choose their loan product. These incentives are commonly referred to as borrower benefits or borrower rewards, and they come in several forms.
Automatic
Some benefits are automatic, meaning that you
automatically receive the incentive or benefit without having to qualify.
Earned
Some borrower rewards are earned, meaning that you must qualify
for them first. A common earned reward is an interest rate reduction
for setting up automatic payments; another is an interest rate reduction for a
pre-determined number of on-time payments. Note that "earned" rewards can
sometimes be "un-earned" if you stop meeting the requirements. Ask your selected
lender for details about borrower rewards, including requirements to qualify
and/or to later be disqualified for them.
Examples of borrower rewards can include:
Interest Rate Reduction
This is usually a percentage by which the interest rate on
the consolidation loan will decrease after a certain number of months of on-time
payment.
Principal Reduction
This is usually a percentage of the original principal balance
of the loan that is deducted from the amount owed - earned after a certain
number of months of on-time payment.
