CornerStone Borrower Benefits

There are three borrower benefits (or repayment incentives) available for Direct Loans.

  1. An interest rate reduction for enrolling in automatic payments.
  2. An interest rebate for on-time payments.
  3. An interest rate reduction for Direct Consolidation Loans

Interest Rate Reduction for Automatic Payments

Borrowers who enroll in the automatic payment program receive a 0.25% interest rate reduction. The interest rate reduction only applies during periods while you're in repayment; not for in-school, grace, deferment or forbearance. If you have two non-sufficient funds (NSF) occurrences within a 12-month period, you will be removed from the automatic payment program, but you can reapply for automatic payments at any time, and receive the interest rate reduction.

Interest Rebate for On-Time Payments

When your loans were disbursed, you were given a rebate of a percentage of your principal balance. (See the tables below.) Although the rebate was applied when your loans were disbursed, if you made a late payment within the first 12 months of repayment, the rebate amount was added back to your principal balance. Payments have to be made within six calendar days after the due date to be "on time." The interest rebate was eliminated for loans first disbursed on or after July 1, 2012.

Direct Subsidized and Direct Unsubsidized Loans
First Disbursement Date Interest Rebate
On or after July 1, 2000 and before July 1, 2009 1.5%
On or after July 1, 2009 and before July 1, 2010 1.0%
On or after July 1, 2010 and before July 1, 2012 0.5%
PLUS Loans
First Disbursement Date Interest Rebate
On or after July 1, 2000 and before July 1, 2012 1.5%

Interest Rate Reduction for Direct Consolidation Loans

For a short time between October 1, 2000 and October 1, 2001 borrowers who consolidated their loans into the Federal Direct Loan Program received a 0.8% interest rate reduction. To retain the benefit, a borrower had to make the first 12 payments on time and any payment made during deferment or forbearance periods did not count as one of the required 12 payments.