25 Oct What to Do When Student Loan Payments Come Due
Reality is setting in now for the 2016 college graduates who relied on student loans to help pay for college. The euphoria of graduating has worn off, and it is time to get down to the serious business of finding a job where you can use that education in your chosen career path. You also want to make sure you can earn enough money to begin repaying those student loans. Most grace periods end about six months after graduation, so the payment due notices should start arriving very shortly, if they haven’t already begun. The first thing you need to do in managing your student loans is to not panic, and then follow these steps to get your payment strategy in order:
• Learn about available repayment plans: If you do nothing regarding your Federal student loans you will be assigned the standard repayment plan. This requires you to make payments at a fixed amount for up to ten years, but this approach might not be right for your specific situation. Talk to your loan servicer about whether you are eligible for any of the other student loan repayment plans. You might be able to spread them out over a longer period of time, or you could start with a smaller payment amount that increases as your income increases.
• Know where to send your payments: You will be making payments directly to a loan servicer. If you don’t know who this is, you need to find out and let them know your current contact information as well. If you have a Direct Loan, you might be eligible to receive a 0.25% interest rate deduction when you sign up to have your payments automatically taken from your bank account each month.
• Take action if you cannot make your payments: Loan servicers understand that it is not always possible for all graduates to immediately begin making payments, but they cannot do anything if you don’t let them know what is happening in your life. You may be able to change your payment date or payment plan, or you could be eligible for Direct Consolidation Loan to make it easier to stay on track.
• Be aware of your options: If you cannot make payments right now you might be eligible for deferment or forbearance. In certain cases you may even be eligible for loan cancellation, forgiveness or discharge.
Get more information on student loans in my book, Secrets of a Financial Aid Pro. It provides information on subjects from filling out the FAFSA to repaying student loans, reviews the updated financial aid timeline, and even talks about good money habits parents can instill in children as they are growing up. Order it now, so you can successfully navigate the financial aid and student loan repayment journeys.