8 Ways to Keep Student Loans from Haunting you | 10.29.12

Posted in Consolidation, Repayment, Student Credit, Student Loans By Student Loan Network Staff

Student loans can be scary! Paying off thousands in debt is no easy task, and repayment can creep up on you if you don’t have a plan. So to keep you on track, here are 8 ways you can keep your loans at bay.

1. Know who you owe

With lenders buying and selling loans, the first step to know where your loans are. For federal student loans, borrowers can track their servicer information through NSLDS.ed.gov. Your loan servicer will be your main contact for making payments and for the day-to-day handling of your federal loans.

For private loans, you should consult their original loan paperwork. If this is not an option, request your free credit report. Your credit report will list all of your creditors, including private loan lenders.

2. Keep in touch

Now that you know who you owe, stay in touch. At the first sign of repayment trouble, contact your lender to discuss your options. Ask about different repayment plans, or if deferment or forbearance options are available.

3. Choose the right repayment plan

Federal loans, and some private loans, have a variety of payment options to choose from. The standard 10-year repayment plan for federal loans will eliminate your debt faster, but monthly payments will be higher. If you’re looking for a lower monthly payment, Income-Based Repayment or Graduated Repayment may be better options for you. Do some research or discuss your different options with your lender.

4. Pay off your private and most expensive loans first

Private loans typically have less repayment benefits, so it’s a good idea to pay these down first. These are often borrowers’ higher-interest loans anyway, so to save money in interest over the years, paying your expensive loans early is a good plan.

5. Put extra cash towards your principal

While paying off your interest is good, paying off your principal is better. Payments are typically applied to interest first, and principal second, so while it may seem like you’re making progress, interest is still accruing on your large principal balance. If you make extra payments, you will need to specify to the lender that they should be applied to your principal.

6. Find your consolidation options

If you struggle making monthly payments or simply have too many loans to keep track of easily, consolidation could be a good option for you. Federal loan consolidation combines all federal loans into one loan with a longer repayment period. This lowers your monthly payment, but not your interest rate.

For private loans, consolidation can be a great way to potentially lower your interest rate – especially if applying with a cosigner. Federal loans should NOT be consolidated into a private consolidation loan because this will wipe away any federal benefits on the loan.

7. Know your deferment and forbearance options

Deferment and forbearance may be available if you’re facing repayment difficulties. However, interest continues to accrue during these periods, so if you don’t need them, don’t use them.

8. Don’t ignore your loans

The absolute worst thing you can do when repaying is to ignore your debt. Don’t let your debt overwhelm you, and instead, take a proactive approach to repayment.

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7 Responses to “8 Ways to Keep Student Loans from Haunting you”

  1. Joseph says on February 4, 2013 at 5:46 am:

    I like your no.5 advice. Never ignore your loans. It will hunt you. Paying off your principal is a great thing to do. Thanks for sharing.

    Reply To This Comment
  2. artid says on December 15, 2012 at 1:10 am:

    Helpful advice!

    Reply To This Comment
  3. Tina DeMelfi-Warner says on November 15, 2012 at 2:49 pm:

    Buy paying off as much as you can before graduation it will assist in your payment plan. Also take the college student loan figuration plan and it will help you realize what you owe and how the payments would be comfortable to your living expenses.

    Reply To This Comment
    • Darcy says on March 1, 2013 at 3:28 pm:

      “buy?” not an english major! You meant to type BY

      Reply To This Comment
  4. Shaila says on November 5, 2012 at 10:01 am:

    It’s important to carefully decide on what loan option is the most suitable one for you. Be responsible in paying loans, you don’t want to ruin your credit history.

    Reply To This Comment
  5. Erin says on November 5, 2012 at 12:51 am:

    Indeed, don’t ignore and take action. It would be great to start a debt free 2013.

    Reply To This Comment
  6. Jenny K says on October 29, 2012 at 11:25 am:

    Helpful advice! Prevention rather than cure is definitely the way to go. Spend time researching those loan options carefully BEFORE applying!

    Reply To This Comment

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