Defend Against Delinquency Part 1: Top Student Loan Tips
No matter what stage you are at in the process of paying back your student loans, these tips will offer you some key information on successfully managing your student loan debt. Even if you consider yourself a smart borrower and you don’t think you have any questions about your student loans, chances are you will find some useful pointers in here. If you’re looking for guidance, we’ve got you covered on a variety of student loan topics, from grace periods, to loan servicers, to repayment plans and budgeting. For more great student loan tips, check out Defend Against Delinquency Part 2.
1.) Get Familiar With Your Loans
Understanding your student loans is a big part of handling repayment and knowing whether you are eligible for forgiveness. The key elements you need to know are your loan amounts, outstanding principal balance, interest rates, loan servicer and contact information, your loan status and your grace period.
The terms of your grace period depend on the type of loan that you have. The grace period varies between federal Stafford loans (six months), Perkins loans (nine months), and private student loans (contact lender). Federal Grad PLUS loans technically have no grace period, but are routinely deferred for six months.
Fortunately, much of this information on your federal student loans can be found at the National Student Loan Data System (www.nslds.gov). If some of your loans aren’t listed here, they are most likely private student loans. If you can’t locate the information on your private loans, contact your school to obtain a copy of the records and look up your private loans on your credit report (www.annualcreditreport.com).
2.) Contact Your Loan Servicer
It is important to maintain a relationship with your student loan servicer. If your personal contact information changes (i.e. your phone number, home address), you need to inform your loan servicer immediately. If your lender cannot contact you because your info is out of date it can end up costing you a lot. If you have questions about your loans simply pick up your phone to call your loan servicer. They are there to work with you to ensure that you successfully repay your loans.
3.) Choose the Best Repayment Plan for You
There are several student loan repayment plans. Unless you choose another repayment plan, you will automatically be placed on the standard repayment plan. The standard repayment plan is usually a 10-year period (but some consolidation loans have longer standard terms). If you are unable to stay on track with the standard repayment option, there are other plans available to you, and you can choose one of these plans.
Depending on which loans you have, your other student loan repayment options may include:
- Extended Repayment
- Graduated Repayment
- Income Based Repayment
- Income Contingent Repayment
- Pay As You Earn*****
- Income Sensitive Repayment
4.) Follow a Budget
An important part of successfully paying back your student loans (or any type of debt for that matter) is creating a budget and following it. If you include your student loan payments in your monthly budget and can manage to keep your total debt and housing payments below 36% of your gross income, you’re in good shape. A budget, whether written out or created online (via financial apps and tools like mint.com), serves as a visual reminder of your financial obligations. Not only does it help you ensure that you don’t go over, but it will make you not want to go over, almost like a game in which you are playing yourself and you don’t want to lose.
Don't miss out on more awesome student loan tips in Defend Against Delinquency Part 2!
*****UPDATE!!! On October 27, 2015, the Department of Education announced a new REVISED Pay A You Earn plan (REPAYE) that helps ease the student loan debt burden by limiting payments to 10% of a borrower's income. You can read more about the regulation here.
Mackenzie Maher graduated in 2010 from the University of California at Santa Barbara with a BA in Global Studies and a minor in Professional Writing, with an editing emphasis. Mackenzie’s diverse portfolio also includes writing, editing, photography, and documentary script writing on such subjects as travel, career, and finance. Next to writing, she is most passionate about world travel (she has visited 24 countries).
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