Direct Debit FAQ
General Direct Debit questions
- What is Direct Debit?
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Direct Debit is a free, automatic payment service for borrowers who prefer not writing checks to make their monthly loan payments. It's not only convenient—you also qualify for at least a 0.25% interest rate reduction when you use Direct Debit.
- How does Direct Debit work?
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Upon approval, we will electronically transfer your monthly payment—along with any additional amount you request—from your checking or savings account to your student loan account.
This automatic transaction will happen on the same date each month.
- Why sign up for Direct Debit?
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It's the most convenient way to make your student loan payments.
- Save money. You qualify for at least a 0.25% interest rate reduction when you use Direct Debit.
- Don't worry. Since we automatically withdraw your monthly payments from your bank account, they're never late (as long as the funds are available).
- Save time. Your time is valuable. The transaction is automatic, so you won't need to write checks or sign in every month to make your payments.
- Help the environment. Going paperless saves trees and reduces solid waste.
Eligibility
- Am I eligible?
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You are eligible for Direct Debit if:
- Your loan(s) has entered repayment.
- You are receiving a monthly installment bill.
- Your loan(s) has not been previously disqualified from using the Direct Debit service due to having insufficient funds.
If you're currently receiving interest notices or interest bills, these loans aren't eligible for Direct Debit until they enter repayment.
- Can I sign up for Direct Debit if my loans are delinquent?
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Yes. By signing the Direct Debit application, you are agreeing to a forbearance to cover any payments that are due prior to the initial electronic transfer of funds to your student loan account.
- How do I apply?
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Step # Procedure Step 1: Download the Direct Debit application (511 KB PDF). Step 2: Complete, print, and sign the form to authorize the service. Step 3: Mail the agreement form only to:
FedLoan Servicing
P.O. Box 3661
Harrisburg, PA 17105-3661 - Can someone other than the borrower sign up?
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- Only borrowers and/or endorsers or co-makers may sign Direct Debit agreements.
- Endorsers/co-makers may only apply for the loans on which they are an endorser/co-maker.
- Powers of Attorney may sign the form, provided FedLoan Servicing has a copy of the Power of Attorney documents on file or you sent one with the agreement.
- How will I know when the service begins?
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We will send you an approval letter after we process your agreement form. This does not mean the service will begin immediately.
When your Direct Debit service begins, your installment bill will include a message informing you that the payment is scheduled to be withdrawn.
- Will I still get my paper bill?
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It depends.
If you entered repayment... Then... Before July 1, 2009, You will not continue to receive a paper bill. On or after July 1, 2009, You will continue to receive a paper bill, unless you sign up for paperless billing.
About your payments
- What if my installment amount changes?
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You will receive correspondence notifying you of your new payment amount. This new amount, along with any additional amount you have requested, will be withdrawn automatically from your account on your scheduled due date unless you notify us of your intent to discontinue the service.
- Can I pay more than my installment amount?
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There is no limit to the amount you may have withdrawn every month from your checking or savings account. Just enter the additional amount when completing your application.
We will continue to withdraw this additional amount even after a change in your installment amount. You must submit any changes to additional amounts in writing or via email, as long as it's from the email address we have on file for you.
Note: We prorate additional amounts across all loans with the same due date. To pay an additional amount on your loan without including the additional amount in the Direct Debit process, you may continue to make telephone and online payments.
- If the funds are not available on my due date, what should I do?
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Contact us at least three business days before your scheduled payment date. We may be able to temporarily suspend the service.
If you do not suspend the service and we attempt to withdraw funds, your payment will remain outstanding until we receive another form of payment. We will not attempt a second debit from your account if the first is returned due to non-sufficient funds.
Repetitive occurrences of this type may result in the termination of the service.
Note: You will not receive the interest rate reduction for any period in which you suspend Direct Debit.
- What if my due date falls on a weekend or holiday?
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We will withdraw the payment from your account the following business day.
Changes to your Direct Debit service
- What if my financial institution information changes?
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If your bank account information changes, you must submit a new Direct Debit application to continue the service.
It's important you notify us, as it may be necessary for us to suspend the pending transaction in order to prevent a debit from an inactive account. Contact us at least three business days prior to your scheduled payment date.
- Postponed payments: What if I request a deferment or forbearance?
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We will automatically suspend your Direct Debit service during a period of deferment or forbearance. You will receive notification of the service resuming in your Deferment/Forbearance expiration letter.
Note: To prevent an unwanted Direct Debit extraction while your deferment or forbearance request is being processed, you may contact us to have the service suspended.
- New loans: What do I do if new loans come into repayment?
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You must complete, sign, and return a new Direct Debit application.
- How do I cancel or discontinue the service?
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You must provide us with signed, written notification.
Allow up to 10 business days for us to process this request. If your due date falls in the processing window, you must contact us at least three business days before the transaction for us to temporarily suspend the service, pending its full cancellation.