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As graduation season approaches, you may notice more and more ads promoting student loan refinance. You may also receive offers from companies offering to lower your rate on your student loans. What does all of this mean to you? Learn what your options are and create the student loan repayment strategy that makes sense for you.

What is Refinancing?

Refinancing means using a new loan with better interest rates and/or terms to pay off an existing loan. Refinancing is commonly used with home mortgages, but can also be a great option for your student loans. Check out When to Consider Refinancing Student Loans for additional insight into potential reasons you might consider refinancing your student loans.

Who Can Benefit from Refinancing Student Loans?

If your goal is to obtain a lower interest rate and ultimately lower the total repayment costs of your loans, then refinancing is worth exploring. This is especially true if you have older private loans that may have a high interest rate, and you feel you may qualify for a lower interest rate now. Some consumers may also want to lower their overall monthly payment. They can achieve this from either a lower interest rate, or by extending the term (i.e., length of repayment) on their loan. Finally, if you have multiple loans with different lenders or servicers, refinancing combines your loans into one. This means you’ll only have to work with one entity for your student loans in the future.

What Types of Loans Can Be Refinanced?

Most companies that offer student loan refinancing allow you to include private loans and federal student loans when refinancing. (Private loans are loans made by a bank or other financial services provider you received to help fund your education. Federal loans (i.e., Direct Loans, Stafford Loans, Perkins Loans) are made by the government.) To qualify, your loans may need to be in their grace period or in repayment to be included in a refinance loan. That means you need to be out of school when you refinance those loans. You can include multiple loans from a number of different loan holders in one refinance loan. Make sure you know all of the student loans you have, and which company or organization is responsible for servicing those loans before refinancing.

Considerations and Cautions Before Refinancing

While refinancing might sound good to you, there are some things you need to consider.

  • Don’t just look at the low teaser rates. The lowest advertised rate is usually available to borrowers with the best credit scores who select the shortest repayment term. These options may not work for your situation.
  • Understand who will actually service your new refinance loan. In many instances, the lender you initially work with may not be the organization you make payments to, or rely on for customer service.
  • If you are considering including federal loans in your refinance, ensure the benefits outweigh any loss of protections or benefits only available with federal loans. For instance, if you include federal loans in a new private refinance loan, you lose access to income-driven repayment plans and the possibility for Public Service Loan Forgiveness that might be available with your federal loans.

The bottom line is, do your research and understand what course of action is best for you. Each person has unique circumstances and concerns, so refinancing may not always be best. You can learn more about refinance loans and other related articles by visiting U-fi.com.

Interested in student loan refinancing? Take the next step toward lower monthly payments.

Congratulations! You’re graduating soon and will be searching for your first job out of college. It’s an exciting time in your life. However, if you’re like the majority of college students, you’re also graduating with student loan debt. Now is a good time to make sure you’ve got a plan to manage your student loans after you graduate.

Here are some easy steps you can take to set yourself up to successfully manage your student loans.

First, Identify All of Your Student Loans

The best place to start is at the National Student Loan Data System (NSLDS). You can find information here about all of your federal loans. This will give you all the details you need to understand how much you’ve borrowed on your federal loans. You can also find out who to contact for questions about your federal student loans.

If you used private loans from a bank or other financial entity, check with your lender to make sure you have the correct loan information.

Next, Get an Idea of What Your Monthly Payments Will Look Like

At StudentLoans.gov you can access a repayment estimator for your federal loans that will give you an idea of what your monthly payment would look like under the different repayment plans available. Depending on your individual circumstances, it’s likely there is a plan that will work for you. If you have relatively low debt and a good salary, you may want to pay off your loans ASAP. The standard 10-year repayment term allows you the quickest and lowest cost method to pay off your loans.

If you have a higher debt load or lower income, there are options that base your student loan payment on your income. Income-driven repayment plans are often helpful since they give you a more affordable monthly payment based on your income. You can learn more about these options as well as how to apply them to your student loans at StudentLoans.gov.

For private loans, visit your lender’s website to access repayment calculators. Or, simply contact your private loan provider for additional information on what monthly repayment amount you can expect.

Know When Your First Payment is Due

With federal loans, you have the ability to postpone payments while you’re enrolled in school at least a half-time. This is also true of some private loans. That means you’ve probably not made any payments on your loans, or perhaps you’ve made some small payments to offset accruing interest. You are also given a grace period on your loans. The grace period is typically six months from your last day of school. The last day is usually considered when you graduate or have dropped below half-time enrollment. At the end of that grace period is when your first payment will be due. Make sure you know when that due date is. That will give you plenty of time to prepare and budget for that new payment.

Know Your Options if you Have Difficulty Making Payments and Need Assistance

There are a number of options for borrowers who encounter situations that make it difficult to manage their student loans. Your student loan servicer will work with you to find a solution, but you have to contact your servicer to get assistance. For example, if your income has changed dramatically you might want to change to an income driven repayment plan or adjust the plan you’re on based on your change in income. Additionally, if you return to school, to pursue a graduate degree for example, you can postpone (or defer) your student loans while you’re back in school. Don’t make the mistake of simply ignoring your student loan payments and damaging your credit score.

As you look forward to graduation and starting a new chapter in your life, just remember to do a little planning and research how to best manage your student loans and find the best repayment plan for your situation. And remember, your student loan servicer is there to help you if you have any questions.

The holidays are over and the new year brings a new semester. For many students, that means a new round of bills and education expenses. That means it’s a perfect time to evaluate your finances and make sure your budget is in the right place.

If you attended college in the fall, you may have relied on financial aid to help cover your education expenses. With a new semester about to begin, you may want to reconsider your options. Many students still owe a balance from fall semester. Meanwhile, others just realized they may need additional funding to help pay for the upcoming semester. Use this time to take stock of your financial resources and make a plan to ensure everything is covered.

Do you still owe a balance on outstanding charges from your fall semester?

You may be required to fully satisfy outstanding charges before you can complete your enrollment for the next semester. Make sure you take care of the previous balance as soon as possible. That way, you avoid any potential delays with your upcoming enrollment. If you didn’t have enough financial aid or personal resources to pay your prior semester’s bills in full, consider a private loan to help cover what you still owe. You can find private loan solutions at U-fi.com.

Did you apply for financial aid either before or during the previous semester?

It’s always a good idea to apply for financial aid by completing the Free Application for Federal Student Aid, or FAFSA, even if you don’t think you’ll qualify. Not everyone qualifies for grants or other “free” money. But, you may qualify for federal student loans, like unsubsidized loans, which are not based on financial need. You can still complete the FAFSA, even after the school year has started. It’s free and doesn’t take much time, so it’s worthwhile to submit. That way, you’ll know you’re not missing out on any financial aid programs.

What are your education expenses going to be in the upcoming semester?

By January, you should have an idea of your direct college expenses are for the upcoming semester. These education expenses including tuition, books, housing, and other costs. Do you have financial aid that pays for everything, or do you still have a gap where additional money is needed? Make sure you look at your full semester and anticipate all of your expenses. Set a budget so you’ll know exactly what your expenses are. Make sure to keep track of what types of income or financial resources can cover those expenses. Use all the financial aid resources available to you, including federal loans, to help pay your costs of attending college. If you still find yourself in need of additional money, you can explore the possibility of a private education loan at U-fi.com and find a solution to help cover your college expenses.

When should you apply for next school year’s financial aid?

In case you missed it, you can now complete the FAFSA starting on October 1 for the following school year. You may only be halfway through the 2018-2019 school year, but it’s already time to submit your FAFSA for the 2019-2020 year. If you haven’t completed the FAFSA for next year, it’s important to get that taken care of as soon as possible. With the earlier submission date for the FAFSA, it’s critical to get your application in as quickly as possible so you don’t miss any priority deadlines for state grant aid or other types of aid that may not be available if you apply too late.

For more tips and resources on planning and paying for college, visit U-fi.com. Remember, now is the time to make sure you have everything in order for the current semester and for the next school year.

If you have student loan debt, you have most likely heard the terms “student loan consolidation” and “student loan refinancing”. Although they sound similar and are often used interchangeably, they are actually two different programs. Therefore, understanding these programs and their key differences can help you make better student loan repayment decisions.

Student Loan Consolidation

Student loan consolidation lets you combine one or more eligible federal student loans into one new Direct Consolidation Loan. As a result, the U.S. Department of Education becomes the new lender. As the administrator of the program, they use companies such as Nelnet to originate and service the loans.

Student Loan Refinancing

Student loan refinancing is offered by private (non-federal) lenders to allow student loan borrowers to refinance one or more federal and/or private student loans into a new private student loan. Consequently, the lender of the new private student loan will be a bank, credit union, or other financial institution. Either the lender themselves or entities like Firstmark Services, a division of Nelnet, handles origination and servicing.

Which is Better?

Both programs offer many benefits. These benefits include simplifying your monthly student loan payments, locking in a fixed interest rate, and lowering your monthly payments. However, there may be some drawbacks as well. For example, if you extend your repayment term, you could increase the total cost of your loans. Therefore, you may forfeit current and potential future federal student loan benefits. Also, any incentives attached to your current loans, such as interest rate reductions for automatic payments, are lost.

Comparing Options

The table below provides a side-by-side comparison of several important features of student loan consolidation and student loan refinancing.

Student Loan ConsolidationStudent Loan Refinancing*
LenderU.S. Department of EducationBanks, Credit Unions, and Financial Institutions
Credit Check RequiredNoYes
Upfront FeesNoneMost lenders do not charge any upfront fees
Interest Rate TypeFixedFixed and variable rate options are offered by most lenders
Interest RateWeighted average interest rate of the loans being consolidated, rounded up to nearest one-eighth of 1%Varies. Factors may include the borrower’s and/or cosigner’s credit history; repayment term; interest rate type; highest level of education; and current market conditions
Repayment PlansStandard, Graduated, Extended, and various Income-Driven Repayment plansStandard Repayment
Repayment Term10 to 30 years depending on the amount being consolidated5 to 20 years
Allowable LoansMost federal student loans are eligible. Private loans are not eligibleFederal and private student loans are allowed by most lenders
Interest Rate ReductionRate reduction for automatic paymentsRate reduction for automatic payments. Some lenders offer an additional rate reduction to existing customers with a qualifying account
Ability to consolidate or refinance multiple timesGenerally no, unless additional federal loans are includedYes
Loss of Federal BenefitsSome benefits may be lostYes, including potentially qualifying for Public Service Loan Forgiveness on federal loans
When can you consolidate or refinanceAfter graduation, leaving school, or dropping below half-time enrollmentAfter graduation, leaving school, or dropping below half-time enrollment. Some lenders allow refinancing while in school

* Features represent those of the largest and/or most common private student loan refinancing programs. A specific lender’s features may differ, so be sure to read the program details carefully.

Choose the Right Option for You

While there are similarities between student loan consolidation and student loan refinancing, they are different programs with unique features. Firstly, if you are interested in consolidating or refinancing your current student loans,determine what you want to accomplish. Your goal may be to lower your monthly payments, lock in a low fixed interest rate, and/or lower your overall cost of repaying your loans. Next, compare the federal government’s Direct Consolidation Loan program to U-fi and other private lender programs once your goal has been set. Then, decide if consolidation or refinancing is right for you based on your financial goals and circumstances.

Want to reduce your monthly payments? Learn how to make it happen with U-fi.

Winter break is often a favorite time of year for college students. It’s a chance to go home, visit family and friends, enjoy home-cooked meals, and maybe do a little holiday shopping. Unfortunately, working off that extra helping of pumpkin pie may be easier than off your holiday spending.

5 Holiday Spending Tips

As you prepare to enjoy the holidays, these tips can help you avoid spending traps. Here’s how you can ring in the New Year without a mountain of debt and  holiday spending regret.

  1. Don’t use student loans to pay for a holiday trip or gifts.

    Using a student loan to finance a trip over the holiday break or a shopping spree might be tempting. But remember, your student loan is intended for educational expenses. Plus, you really don’t want to take on student loan debt for a short term benefit that you’ll be paying back for 10-plus years with interest.

  2. Avoid paying for everything with a credit card.

    Much like using a student loan, you’re better off to simply pay with cash and avoid using a credit card for holiday expenses. Credit cards will typically have high interest rates, especially if you carry a balance. If you can’t pay cash for your holiday purchases, it’s probably not worth the cost.

  3. Don’t feel obligated to buy gifts for all your friends and family.

    If you’re a student, your friends and family understand that you’re on a tight budget and may not have the resources to buy gifts for everyone. Simply spending some time with friends and family will likely be more meaningful than any gift you could purchase at the mall. Find ways to do small but meaningful things that will be appreciated.

  4. Don’t forget to set a budget or spending limit.

    It’s important to know in advance what you can reasonably afford to spend. It’s a good idea to set a budget for yourself and cap your spending at a certain dollar amount. That will help keep you on track and also let you plan better for the people on your gift list, and possibly help you cut back on the number of people on your list. Some families draw names for gifts or find other creative ways to help family members keep their expenses down and enjoy their time together.

  5. Avoid paying for gift wrapping or expensive gift bags and cards.

    It’s convenient to drop your gifts off and have someone else wrap them. However, there’s a cost for convenience and it simply might not be worth paying for. Buying wrapping paper after the holidays is a great way to save money and plan ahead for the next year. Plus, if you plan and don’t make all your gift purchases at once, you won’t be bogged down wrapping a lot of gifts at the last minute. Often, a card and a gift bag may actually cost more than the gift you’re giving.

With a little discipline and planning, you can set yourself up for a fun-filled holiday season without incurring the stress of spending too much or putting yourself into debt. Remember to enjoy the holidays and the time spent with friends and family. Many times, the best gifts are the ones that don’t cost anything at all.

At some point, most of us say, I wish I knew then what I know now. That same sentiment holds true for some college students regarding the financial aid process. After learning about the financial aid process, some students look back and wish they made different decisions.  Being better informed from the start changes how students approach their financial aid and funding options.

Here are five things students wish they knew about the financial aid process while planning for college.

1. It’s Never Too Early to Start Planning and Saving for College

College-bound students and their families often wait to think about the admissions process and financial aid options. Many times, they wait until the student’s junior or senior year of high school. However, students should research schools and possible career options early. Getting started in high school or junior high gives them an idea of which schools are the best fit. Heather, a junior in college, said she drastically underestimated all the costs associated with her education. She didn’t know she needed to rely on student loans as much as she did. Even if you expect a scholarship, keep in mind the total costs you and your family may incur. These costs can have an impact on your long-term planning and financing.

2. Know Your Deadlines and Don’t Miss Them

Braxton is in his freshman year and says he missed out on some state grant money because he waited too long to complete his FAFSA (Free Application for Federal Student Aid). He said if he’d been more aware of his state deadline, he would have applied sooner and likely received money from his state grant program. He also said there were some scholarships that had very early deadlines that he missed. It takes some organization and research to be sure you know all the relevant deadlines for various scholarship and grant programs.

3. You Don’t Have to Figure It All Out on Your Own

The financial aid process can often be confusing to first-time students. Rather than trying to do it all on your own, you can find help. Your high school counselors are great resources. If you have a college or university nearby, they may offer free FAFSA workshops or presentations. They can also help you understand the financial aid process better. If you speak with your high school counselor or someone from a financial aid office, don’t be afraid to ask questions so you’ll be certain you know what you need to do. Although you’ll be doing your first FAFSA as early as October of your senior year, it’s never too early to begin learning everything you need to know. Federal Student Aid at the U.S. Department of Education has a FAFSA4caster that you can use to understand your options for paying for college.

4. You Don’t Have to Accept the Full Loan Amount on Your Award Letter

Once your financial aid application is finalized, your financial aid office sends you an award letter. Your award letter may show different types of financial aid, such as scholarships, grants, and student loans. Colleges usually provide award packages to cover your entire cost of attendance (COA). Your COA includes tuition, books, supplies, housing, etc. However, only borrow what you need, even if you were offered a higher amount. You don’t need to accept the full amount awarded.

Another college student said she assumed she should take the amount offered. At first, she thought the extra money could be a cushion if needed. She admitted she spent frivolously on things she really didn’t need. She forgot her loan was unsubsidized. That means interest accrued on her loan while she was in school. Student loans are a great resource to help pay for school as long as you understand the terms and conditions and only borrow what you need.

5. Don’t Assume You Won’t Qualify for Financial Aid and Skip Completing the FAFSA

Some students and families believe that their income may be too high to qualify for any type of financial aid and simply do not complete the FAFSA. Although you may not qualify for grants, you still need to complete the FAFSA to determine your eligibility for student loans and college work study. Some programs (such as unsubsidized student loans) are not need-based and do not have an income limitation. Also, the FAFSA is free to complete, and you could qualify for some other types of aid. One thing families forget is that if they happen to have a higher income, they may also have multiple children attending college, which is a big factor in determining financial aid eligibility. Factors such as your family income, household size, and the number in your family attending college all help determine your financial aid eligibility.

By planning ahead and thinking about the cost of college early, many of these common scenarios can be avoided. By starting your planning early, you can avoid the “I wish I knew then what I know now” feeling down the road.

You’re in college and on your own, but you may still experience the occasional financial pitfall. Below are money mistakes many students make, and some tips on how to avoid them.

Financial Pitfall #1: Spending all your living expense money early in the semester.

You’ve probably set aside spending money for personal expenses if you live off campus. Or, you may have financial aid funds to use for room, board, or other educational expenses. That money needs to last through the entire semester, but many students spend it within the first few months. How can you avoid spending your money too early? Use these financial management tips and this budget worksheet to help develop a monthly spending plan.

Financial Pitfall #2: Not taking advantage of part-time employment opportunities.

Most schools offer part-time employment options for students through Federal Work-Study, and by posting on- and off-campus jobs. You might worry that a job will conflict with academic work, but studies show that students who work between 15 and 20 hours while in school are generally more confident and successful. Having a job helps bring in money regularly throughout the semester and can help build your resume. Your college financial aid office awards Federal Work-Study and generally posts related job opportunities. Work-Study is based on financial need and requires a Free Application for Federal Student Aid (FAFSA) . Other part-time jobs may be posted by the Career Office, Student Affairs, or other places on campus. Check your school website for more information.

Financial Pitfall #3: Accumulating credit card debt.

You’ve probably already received credit card offers in the mail. You may also notice giveaways and travel rewards that make the offers sound appealing. Be careful – as a new credit card holder, your interest rates will be high, and credit card offers tend to have many fees attached. Be sure to read the fine print and note that the initial low interest rate offered may expire in just a few months. You can quickly accumulate credit card balances that can swell out of control, especially if you’re only making minimum payments. Here’s an overview of credit card pros and cons, along with additional information about other matters to consider.

Financial Pitfall #4: Taking out student loans without understanding them.

Student loans are so common that students often see them as just another type of financial aid. There is an important difference; student loans must be paid back. While student loans can be a useful way to pay for your education, keep your borrowing to a minimum. Know what your monthly loan payment will be when you get out of school. Understand what you can realistically afford to borrow. It is also important to know the types of loans, the terms of those loans, and the options available. To get a general idea of what your monthly loan payment may be when you finish school, Federal Student Aid provides an easy-to-use repayment calculator.

The earlier you can learn the basics about managing your finances, the better off you’ll be in the long run. These simple steps should help you build the foundation you need for a successful financial future.

With the numerous private student loan repayment options available, selecting the right one can seem a bit overwhelming. However, with a little bit of knowledge, you can make a more educated decision. In Part I of this article, we covered repayment plan options. Now, we’ll review interest rate types and repayment terms to find the best student loan option for you.

Interest Rate Type

Borrowers taking out private student loans or refinancing their current student loans have a few interest rate options.

  • Variable: Variable rate loans have an interest rate that can fluctuate over time as the rate index, such as the Prime Rate or LIBOR, goes up or down. Variable rate loans typically come with lower starting interest rates than comparable fixed rate loans. However, they come with greater risk, since rates may rise in the future. Most variable rate loans have a cap that places a limit on how high the rate can rise.
  • Fixed: With a fixed rate loan, once the rate is set, it does not change for the entire repayment period. Fixed rate loans normally have higher starting rates than variable rate loans. This is because the lender takes on the risk of interest rates fluctuating over time.
  • Hybrid: Another less popular option is a hybrid rate loan. With a hybrid rate loan, the interest rate is usually fixed for a period of time. It then switches to a variable rate for the remainder of the loan period.

Tip: If you intend to pay off your loans in a short period of time, consider a variable rate loan. If you plan to take longer to pay off your loans or prefer stable, predictable payments, a fixed-rate loan may be the best choice. When deciding which type of rate to choose, use the lender’s loan repayment calculator to estimate the savings between a variable rate and a fixed rate loan. Also decide whether the estimated savings is worth the additional risk of a variable rate loan.

Repayment Term

Another important item that determines the interest rate you will be charged is the repayment term you select. Most lenders offer private student loans and refinance loans with repayment terms between 5 and 15 years. Some lenders offer repayment terms as long as 20 years.

When determining interest rates on private student loans, remember that the shorter the repayment term, the lower the interest rate. This is because the lender takes on additional risk by allowing you to repay your loan over a longer term.

Tip: Your monthly payment amount is determined by several factors. These include the principal balance of the loan when you start making payments, the interest rate, and the repayment term. Shorter repayment terms come with lower interest rates, but higher monthly payments. Choose a repayment term with a monthly payment you can afford, especially when you are first starting out.

Choosing Your Best Option

Choosing the repayment option that best fits your current and future needs can be a bit tricky. But, with a little planning and thought, you can zero in on the loan terms that are best for you. If you find your financial situation changes down the road, and your current repayment terms no longer meet your needs, you may be able to work with your lender to modify your repayment terms. If that isn’t an option, then you can look at refinancing your student loans and replace them with a new loan that is a better fit.

Tip: Most private student loans do not have any pre-payment penalties or fees. If down the road you can afford to pay more than the minimum each month, you can pay down your loan faster without being charged any pre-payment fees. This reduces your overall cost of borrowing in the end.

Understanding the nuances of private student loans can make a big difference when deciding which one is right for you. Making the right choices when taking out student loans can have a strong impact on positioning yourself for a bright financial future.

If you borrowed student loans to help pay for college, you may not be required to make any payments until after you graduate or drop below half-time enrollment. That sounds like a pretty good deal; no payments and no worries while you focus on your studies. But remember, if you take out a federal Direct Unsubsidized Loan, a federal Direct PLUS Loan, or a private loan, interest accumulates during those months (or years) you’re in school and not making any payments. Here are some ways you can save on your student loans while you’re still in school.

Accruing Interest

Interest that accrues on your student loan will typically be capitalized when you begin repayment. That means any accrued interest during those months you are not making payments is added to the original principal amount of your loan. For instance, if you borrowed a $15,000 student loan with an interest rate of 6% as a freshman and made no payments for the four years you were in school, plus your grace period, 51 months would have passed. In this scenario, when you begin your repayment period, you would actually have a balance of $18,825 when you start repaying your loan 51 months later. That’s because $3,825 in interest (also known as capitalized interest) would have accrued during those 51 months and was added to your original loan amount.

In-School Payments Can Help

Now, let’s say you have a part-time job while you’re in school, working 15-20 hours a week to help with some of your expenses. If you could simply pay around $75 a month toward that $15,000 student loan, you could actually pay all the accruing interest (remember, that’s $3,825 total that would have been added to your loan when your first scheduled monthly payment is due). If you’re able to pay $75 towards your student loan’s accruing interest, the total cost you could ultimately save over the life of a 10-year repayment period would be nearly $1,300.

Example

Paying Interest While In School (No Capitalized Interest)Fully Deferred Payments While In School – No Payments (Capitalized Interest)
Original Loan Amount$15,000$15,000
Interest Accrued During In School and Grace Period (51 months)$3,825$3,825
Interest Paid During In-School and Grace Period$3,825$0
Loan Amount When Entering Repayment$15,000$18,825
Number of Months of Repayment120120
Monthly Payment$166.53$209
Total Interest Paid on Loan (including any payments during in school and grace period)$8,808.60$10,080
Total Paid on Student Loan (original loan amount plus interest)$23,808.60$25,080

As you can see from this example, making interest payments while you’re in school and during your grace period can help you save on your student loans down the road. Plus, making payments during your in-school and grace period also gets you in the habit of making payments on your student loan and better prepares you for successful repayment. Remember, this is just an example of borrowing one loan during your freshman year of college. Imagine what the capitalized interest could look like if you borrow each year of college, or what your savings would be by making continued interest payments while you’re in school. You can learn more ways to save on your student loans and get additional helpful information by visiting our student loan resources.

If you graduated from college this year, you may realize just how much student loan debt you have. With the average student loan debt at around $29,000 per student, it can be overwhelming to see that number and you may wonder how you are going to pay it back. Well, take a deep breath: you have several options when it comes to repayment. Don’t hesitate to give your student loan servicer a call because they will help you work through your options. Or, you can also follow these 4 steps to get ready for student loan repayment. It’s important to investigate your options and be prepared. It’s equally important to know a few things you should avoid.

Deferment & Forbearance

Deferment and forbearance allow you to temporarily postpone making payments or can reduce your payment for a period of time. Sounds great, right? So, what’s the problem? Your student loans continue to accrue interest. That interest could cost you thousands of dollars a year, depending on your student loan debt. Don’t delay the inevitable. You will have to pay back your student loans whether you pay them now or pay them later. Deferment and forbearance are great options if you have no financial means when you enter repayment. However, you shouldn’t use them as a way to delay paying your student loans. If you do need to go this route, try to at least make interest payments on your loans. If you don’t, the interest will capitalize leading to higher student loan debt and higher monthly payments once your deferment or forbearance expires.

Don’t Miss Payments

Make your payments every month and on time. If a loan payment is not made by the due date, the loan becomes delinquent until payment is received. Depending on your servicer or lender, this delinquency can affect your credit report as a negative mark, therefore negatively affecting your credit score. In addition, when you miss monthly payments, your payment will double, then triple, and continue to snowball which may put you in a situation that’s difficult to catch up on.

Avoid Scams

We’ve all heard the saying, “if it sounds too good to be true, it probably is.” It may seem enticing to pay a company to handle the stress of your student loans and promise you low payments or loan forgiveness, which are why these companies exist, but you’ll be wasting your money. Student loan servicers and lenders will not charge fees for finding a repayment plan that fits your needs. The U.S. Department of Education offers several student loan repayment plans and loan forgiveness, cancellation, or discharge for certain circumstances, but all of their services are free of charge.

Being prepared for repayment and understanding what you should avoid are two big steps to successfully paying off your student loans. Just remember, your student loan servicer is there to help you. If you need to adjust your repayment plan or just have questions about your student loans, give them a call (844.307.3451).