Easy Guide To Paying Off Your Student Loans

The 6 month grace period for many recent college graduates is about to expire, which means…is time to start paying those student loans!

And if the past is any indicative of how things will unfold, there will be a lot of people who will miss making their first payment, and some will end up having to default on their loans, even though there’s really no good reason to let that happen.

This is a payment you cannot afford to miss, even if you cannot…well… afford it! Pun totally intended.

The stakes are way too high, even if you miss one payment, it can damage your credit score, and although many loan servicers do not report delinquencies until borrowers are 90 days overdue, it can still affect your credit history.

Borrowers who default on their student loans, face having part of their wages and usually all of their tax refunds seized by the government….

Yet sadly a lot of borrowers quickly lose track of what they owe, and their lenders can also end up losing track of them because of address or email changes.

That’s still no excuse for not paying your student loans…

Borrowers shouldn’t wait to get a bill before making plans to repay the debt. Instead, here we offer you a quick and simple guide to paying your student loans:

1.KNOW WHAT YOU OWE:

The typical borrower with student loan debt has four loans, according to a recent Experian study, and it’s not unusual to accumulate far more.

A borrower’s first task is to make a list of every loan, including the balance owed, the type of loan (federal or private), the date the first payment is due and the servicer, or the company designated to take your payments.

Borrowers should check the National Student Loan Data System for any federal loans they may have forgotten or for which they need more information. To uncover private loans, borrowers should get copies of their credit reports from www.annualcreditreport.com.

Recent federal loans have names that include Direct, Perkins, Stafford, PLUS or Grad PLUS. Older loans include Federal Family Education Loan (FFEL). Private loans are typically issued by banks, credit unions, colleges or non-profits.

2. USE YOUR RESOURCES TO KEEP TRACK OF YOUR LOANS:

Borrowers typically can get access to their loan accounts online, and doing so can make managing multiple loans easier. Graduates should take the time to update their addresses and emails with the loan servicers so that they don’t miss critical communications.

3. BECOME FAMILIAR WITH YOUR REPAYMENT OPTIONS:

Income-based repayment plans, along with generous deferral and forbearance options that offer payment relief for up to three years, can keep the vast majority of federal student loan borrowers from defaulting, says Reyna Gobel, author of the book “CliffsNotes Graduation Debt.”

Even graduates who can manage their first payments should investigate alternatives.

Pay as You Earn, a federal income-based program, could lower payments to less than 10 percent of the borrower’s income – and those who work in public service jobs could be eligible for forgiveness of any remaining balances after 10 years of payments. (Those who work in non-public service jobs can get forgiveness after 20 to 25 years, depending on when the debt was incurred.)

If you’re unemployed or not earning much, Pay as You Earn can lower your payment to zero – while still keeping you out of default. Extended and graduated payment programs also can make payments more manageable. For more information, check the Department of Education’s student aid site and the Consumer Financial Protection Bureau’s Repay Student Debt tool.

4. CONSIDER LOAN CONSOLIDATION:

Consolidation used to be a way to lower interest rates on federal debt and make one payment instead of several. Today, federal student loans offer fixed rates, and consolidation merely offers a weighted average of those rates.

Plus, many borrowers now have just one servicer even if they have several federal loans, so they may already have the convenience of a single payment. The best reason to consolidate may be to opt for lower payments by choosing a longer payback period — 15, 20 or 30 years instead of the typical 10 years, for example. But that increases the total cost of the loan.

Student Loan Geeks offers assistance with student loan consolidation. Please contact us today at 844-345-GEEKS to talk to one of our expert student loan counselors about your options.

Private loans cannot be included in a federal student loan consolidation.

5. RETHINK AGGRESSIVE PAYMENT PLANS

Borrowers with decent incomes may be tempted to throw every available dollar at their debt. While this may decrease the interest they pay, they could be poorer in the long run if they don’t take advantage of opportunities to save. (For more, see reut.rs/1xKgoEl)

Another problem with rapid debt repayment is a potential loss of financial flexibility. Money paid to student lenders is gone for good, unlike money accumulated in savings. A layoff or other economic setback could leave the borrower scrambling for cash.

6. CONTACT US FOR HELP

If your loan servicer is not being helpful, and dealing with them has become a hassle, let us take care of that for you. We assist American borrowers with any problems regarding their federal student loans. So do not hesitate to reach out for help. There is no need to stress, struggle, or miss a payment, we’re here to help you!

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