Tag Archive for: Repayment

Don’t let your student loan statement be a surprise in the mail. Be prepared for student loan repayment by asking yourself these three questions:

1. Who are your loan servicers?

When you take out student loans from the federal government, you will be assigned a student loan servicer by the U.S. Department of Education. If you have private student loans, the servicer will be assigned directly by the lender. Your student loan servicer is who you will work with to make payments on your student loans. They can also help you understand your student loan repayment options, and answer any other questions you may have. If you have multiple student loans, you may have multiple loan servicers. Visit nslds.ed.gov to look up your federal student loan servicers if you don’t know them. For private loans, contact your lender.

2. How much are your monthly payments and when are they due?

Now that you know who your loan servicers are and where to send payments, you need to know how much to send and when. For federal student loans, there’s generally a six-month grace period after graduation before your first student loan payment is due. By this point, your servicer already put together a student loan repayment schedule. This schedule shows you how much your monthly payments are.

You should receive a statement from your servicer three to four weeks before your payment is due. Make sure your servicer receives your payment by the due date. If you don’t make a loan payment by the due date, the loan is delinquent until you make a payment. Depending on your servicer or lender, this delinquency may be put on your credit report and negatively affect your credit score. Most servicers and lenders offer auto debit, meaning your monthly payment is taken directly from the account you specify on the due date. By doing this you can ensure your payments are never late. Some lenders even offer incentives, like interest rate reduction, for this type of payment.

3. What are my repayment options?

Your federal loans are automatically in a standard, 10-year repayment plan if you have not specified otherwise. If you find that the payments are more than you can afford, there are other options to explore. Federal student loans have several repayment options to help you repay your student loans. Call your student loan servicer and they will help you work through your options.

You can also consider refinancing or consolidating your student loans into one payment. If you have more than one servicer or lender, you will be making multiple payments every month. By consolidating or refinancing, you can make one monthly payment to one servicer. Consolidation will combine your federal student loans into a new loan so you have a single monthly payment. Refinancing can combine both your federal and private student loans into a new loan, with a new interest rate and term. Student loan consolidation and refinancing is not for everyone, so make sure you understand the pros and cons of each.

Following the basic steps outlined above will set you up for successful student loan repayment. Remember that your student loan servicer is there to help, so never hesitate to reach out if you have questions.

When you’ve recently entered the workforce, balancing repaying student loans and a budget can be a challenge. This is especially true if you have a standard entry-level salary. As the cost of higher education continues to rise, it becomes increasingly difficult to manage high monthly loan payments. You also need to worry about everyday expenses like rent, car payments, utilities, and groceries. At times, it feels like you have to make a choice between repaying student loans and living your life.

No matter what some newspaper columnists might lead you to believe, defaulting on your loans is never a good idea. Instead, tap into that survival instinct you developed in the classroom. Get serious about repaying those student loans – the smart way. Here are five ways to manage your loan payments as a young professional.

Stay in contact with your loan servicers.

There are generally two categories of student loans: federal and private. Regardless of the category, student loan servicers handles billing, payments, customer inquiries, and other administrative services for your loan. Servicers help you navigate loan repayment systems, find the right repayment plan, and answer your student loan questions. If you don’t know who services your federal loans, you can find out at nslds.ed.gov. This site lists all of your federal loans, along with the contact information for your servicer. To obtain contact information for your private loan servicer, review your lender’s website or call their toll-free number.

Know which questions to ask.

The questions you should ask depend on your loan type. For federal loans, ask if you’re on the right payment schedule for your financial situation. There are a variety of repayment options available. Your servicer uses information about your job, income, and federal loan amount borrowed to help you find the repayment plan that’s best for you. Options include payments based on your current income, or payments that increase periodically over the life of your loan. Whichever option you choose, remember to keep a long-term view when making decisions about repayment schedules. Consider the interest implications of any option. Private loans are different. You selected repayment terms at the time of application. Information about your private loan rates, terms, and repayment can be obtained from your private loan servicer. They can also offer information and support throughout the life of your loan.

Consider consolidation.

Depending on what type of loan(s) you have, consolidation may help you save money. If you have one or more federal loans, a federal consolidation loan can combine your loans into a new loan with a blended interest rate. It may also extend your repayment period. When you talk with your servicers, you may want to discuss this option. You can find more information about consolidation and federal loan repayment at the Federal Student Aid website.

Private student loan refinancing allows you to replace your existing private and/or federal student loans with a new private student loan under different terms. If you are repaying multiple student loans, want to lower your monthly payment, or if your interest rates are higher than you would like, you may want to consider private loan refinancing. Private student loans require a credit check, and you can often get a lower interest rate with a cosigner. Most lenders provide loans with no application or origination fees. You may also prepay your loan at any time without penalty. You will have the opportunity to see your rates and terms before finalizing your loan.

Do your research.

If you have student loans with high interest rates, refinancing with a private loan can be a great option. They may allow you to save money over the life of your loans with a lower interest rate. But private loan refinancing isn’t right for everyone. For instance, if you have federal loans that carry special repayment benefits or forgiveness programs, it might be best to explore federal loan consolidation. There are unique benefits to both, so be sure to do your research.

Stay current on your monthly student loan payments.

The consequences of defaulting on education loans are very serious. If you’re not able to make your payments, contact your student loan servicer before becoming delinquent. They have trained representatives who can help you find the best solution for your needs. If you lose your job or experience other difficulties, you may be eligible for deferments or forbearances. These mean you may stop making payments for a period of time.

When it comes to repaying student loans, there are many ways to build a healthy financial future. Staying in touch with your servicer and being aware of the options available to you are some of the best ways to make smart financial decisions.