Student loan repayment is an issue that many students have anxiety about. Attending college is a daunting endeavor, with time commitments, studying, exams and expenses. While most students may not think about loan repayment while in school, that is the best time to confront putting together a plan. This is because the loan information is fresh in your mind and you can have a better grasp on what is expected down the road. Here is how you can devise a student loan repayment plan:
Step 1: Understand Your Loan
lending business can be complicated. The one advantage that loans for
education seem to have is that they are offered at lower interest rates
than other consumer based loans. Find information about federal loans
and types at the U.S. Department of Education's National Student Loan
Data SystemSM (NSLDSSM). If your loan is through a private entity,
contact the financial institution and get information from your loan
representative. Find out about the total amount of the loan, principal
and interest, and payment amounts.
Step 2: Understand the Grace Period
you graduate or leave school for any reason below half-time enrollment,
there is usually a period of time for most lenders before it is
expected that you begin the repayment process. The grace period is set
at around six months for most Federal loans, like the Stafford or Family
Education (FFELSM), while Federal Perkins loans provide a nine month
leeway. Federal loans made to parents start payments immediately.
Step 3: Design the Repayment Plan
have a number of choices and several repayment plans at their disposal.
Most are designed with meeting the various needs of different
borrowers. The amount of the payment and length of repayment time will
vary and be dependant upon which repayment plan is chosen.
Step 4: Use a Repayment Plan Calculator
a repayment program calculator to figure the estimated repayment
amount. Contact your loan servicer to answer specific questions for
repayment of FFEL, Perkins or Direct loans. Perkins loan servicers are
located at the school which made the original loan. You can also find
out at the NSLDS website. If the loan was obtained from a private
source, contact the loan institution to learn about calculating
Step 5: Make Electronic Payments
setting up regular and automatic electronic payments. You may be able
to reduce the interest rate if you do so. Regardless, setting up auto
pay is the most effective strategy to ensure that you always pay on
time. This will eliminate damaged credit report worries and help you to
establish a higher credit rating in the process. Many people believe
that student loans don't count on your credit report, but the actual
fact is that they do.
Step 6: Resolve Payment Issues
people intend to pay their financial obligations on time. However, it
is a good idea to have your loan servicer information handy in case it
is needed. If you anticipate that you will have trouble making your
payments for any reason, arrange to contact your loan servicer right
away to avoid embarrassment or credit reporting issues. Loan servicers
are trained to be able to address these issues and help you to determine
what the best options are, including changing the repayment plan and
requesting a deferment to allow for temporary cessation of payments.
Forbearance is another option to make smaller payments temporarily or
extend time periods.
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