No matter where you are in your path, student loans can feel like a drag on your life and the decisions you make.
They can dissuade you from making major life purchases like a car or your first home and they can prevent you from saving or investing your hard-earned money, which is detrimental to your future. Defaulting on your student loans can ruin your credit rating and cripple the financial decisions that you make. So how can you pay them off in a timely and efficient manner? Our tips can help.
Make Sure You Cover Payment Number One
Usually student loans come with a six-month grace period after graduation. Many students become distracted during this time. Finding a job, a place to live, buying a car – these are all stressful and momentous occasions that may push student loan payments to the back of one’s mind. Students can change addresses during this time so servicer notices might get lost in the mail. It is in your best interest to be proactive by engaging with your lender to ensure that you meet your first payment on time.
Be Cognizant of What You Owe and When It Is Due
Students typically accumulate four loans, though it’s common to accumulate more.
As someone with student debt, your priority is to make a list of all your loans. Include the owing amount, the type of loan (federal or private), the date of the first payment and the servicer, or the company designated to take your payments.
Know the Payment Options Available
Thinking about defaulting? There are much better options. If you borrowed from the federal government, you have the option of choosing income-based repayment plans and are also given generous deferral and forbearance options that offer payment relief.
If you borrowed from private lenders your options are more limited, but some deferral is usually available for those suffering from economic difficulties.
It’s a good idea to keep an eye on your credit report for loans you may have forgotten about. Once a year you can review it for free at ocs.transunion.ca/
Make Automatic Payments
Usually, lenders offer bonuses on the condition that you have payments automatically deducted from your bank account every month. The federal government cuts your rate by one-quarter of a percentage point, which amounts to about $500 if you pay a $30,000 debt over 10 years.
Don’t Let Yourself Fall Behind
If you come back from default but find yourself struggling again, see if you can qualify for smaller payments under an income-driven plan. Keep in regular contact with your servicer and contact the U.S. Department of Education’s loan ombudsman or file a complaint with the CFPB if you’re not getting the answers you need from your servicer. Remember, if you fall behind you are not alone, and help is available.
Nezha Boutamine | Contributing Writer