Finances & Money

Our Student Loan Interest Rate Went Down by 1%!

I just opened a letter from our student loan provider that’s been sitting in a pile all week. I thought it was the monthly bill for Stacie’s loan, but it turns out it was a notification. Here’s what it said:


Congratulations, you have qualified to receive a repayment incentive


We have reduced the regulatory interest rate on the loan(s) listed on the reverse side of this letter.

Federal regulations require us to inform you that if your loan(s) defaults or is consolidated, the interest rate will revert to the statutory rate in accordance with your promissory note.

The reverse side indicated a full 1% rate reduction for Stacie’s loan. The loan has a remaining balanced of a little over $11,000, originally around $20,000.

Now I was skeptical about this letter because until I consolidated her loans, I would get tons of spam mail from loan consolidation places. They all said that she would get amazing rates and I thought maybe our provider was trying to trick us. So, I logged into her account, but the site was down for maintenance. Then I called their help line. I punched in through the automated line to listen to the loan details.

Sure enough, the loan has come down from 5.75% to 4.75%.

Now, I’m not sure if this is the same rate reduction we were expecting for making 36 on-time payments because my understanding is that was only supposed to be a half-percent reduction. I’ll assume it is, or else we’ll be getting another letter in a month or so (I thought we had another payment to go).

So we get more assistance from our lender for an unexpected reason. Just last month I found out my student loan was automatically deferred since last November, meaning the government was paying my interest for me.

Anyone else get this letter? If not, I guess I’ll assume it was the expected reduction (or at least until I can log in to the account).

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Clever Dude


  • I was informed that my interest rate went down by 2%. This was right after I made a large payment. I think this extra payment made their system think that I had already made 48 payments (even though I’ve only been making payments for about 14 months).

  • In the mid-nineties, I consolidated my student loans with SallieMae. At the time, my rate was 8% and was lowered to 7.75% upon setting up automatic debit. I have never missed or been late on a payment since and still owe $13,000+, but my rate has never been reduced from what seems like a fairly high rate. It seems to me that they’re not going to give me a better rate simply because I call up and ask. Anyone know how I can get a better rate, either with them or somebody else? Thanks…

  • Mikey
    Once you have consolidated your student loans, as far as I know, there is no way to significantly lower the interest rate. With a balance of only $13,000 and an interest rate that high, I would forego all my other savings for a year or so and just pay off the loan as soon as possible.

  • I consolidated my loans through Sallie Mae, and they already told me that the first 36 on time payments will result in 1% reduction in the interest rate.

  • Don’t feel bad Mikey. I consolidated back in 1994 and have paid thousands over the years. Unfortunately I’ve had to go in deferment over the years as well.

    I an unhappy to report that when I graduated from college 18 years ago I owed 18K and now I owe 20K.

    I just spent 3 useless hours I’ll never get back talking to Indian customer service people from Sallie Mae who gave me so much misinformation.

    First they told me they could reduce my rate by .25% and then said they couldn’t and then said they could. When I finally got an American she told me that I had to enroll in the automatic payment plan for the .25% reduction.

    At this rate I will die owing Sallie Mae. Something’s gotta change. I could have borrowed money from the mob and came out better.

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