What are the Direct Loan repayment incentive benefits that are in effect?

• Disbursed on or after July 1, 2000 and before July 1, 2009. Borrowers of Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans disbursed during this period will receive a 1.5 percent up-front interest rebate on the loan amount borrowed. To retain the up-front interest rebate, a borrower must make their first twelve monthly payments on time. If all of the twelve monthly payments are not made on time, the rebate amount is added to the borrower's principal loan balance, which will, increase the loan amount that must be repaid.

• Disbursed on or after October 1, 2000 and before October 1, 2001 (Only applies to Direct Consolidation Loans). All borrowers who consolidated eligible student loans into the Federal Direct Consolidation Loan Program during this period received an interest rate reduction of 0.8 percent. To keep this benefit beyond the initial twelve-month period, borrowers must make the first twelve monthly payments on time. The 0.8 percent rate reduction will become permanent once these first twelve payments are made on time.

• Disbursed on or after July 1, 2009 and before July 1, 2010. For all Direct Subsidized Loans and Direct Unsubsidized Loans made during this one-year period, the rebate amount is equal to 1.0 percent of the loan amount borrowed. The Direct PLUS Loan interest rebate amount will remain 1.5 percent for all Direct PLUS Loans. To retain the up-front interest rebate, a borrower must make their first twelve monthly payments on time. If all of the twelve monthly payments are not made on time, the rebate amount is added to the borrower's principal loan balance, which will increase the loan amount that must be repaid.

• Disbursed on or after July 1, 2010 and before July 1, 2011. For all Direct Subsidized Loans and Direct Unsubsidized Loans made during this one-year period, the rebate amount is equal to 0.5 percent of the loan amount borrowed. The Direct PLUS Loan interest rebate amount will remain 1.5 percent for all Direct PLUS Loans. To retain the up-front interest rebate, a borrower must make the first twelve monthly payments on time. If all of the twelve monthly payments are not made on time, the rebate amount is added to the borrower's principal loan balance, which will increase the loan amount that must be repaid.