Avoiding Student Loan Repayment Traps

By Kaitlin Hurtado on May 23, 2017

Signing on for student loans can be just as daunting as entering college, and repaying all of your student loans may seem like an even bigger challenge than college itself.

Student loans and their impending repayment can easily get pushed to the back of your mind, but when those reminder emails and physical letters show up and are attached to your name only, it’s easy for stress and fear to overpower you when you think of the money you may or may not have to go toward repaying your student loan debt.

However, if your financial situation is put in jeopardy when it comes to repaying student loans, you should be taking steps to ensure that the repayment process is as easy (and error-free) as possible.

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1) Be as knowledgeable as you can regarding loans 

One of the biggest issues that arise from student loans is students’ lack of general knowledge when it comes to student loans and how to repay them. When you first accepted your student loans, you should have gone through loan counseling that offered a quick lesson on student loans and how to repay them. Unfortunately, many college students breezed through it without much thought or took it so long ago that they forget the majority of what they had learned through loan counseling.

There are plenty credible articles and pages dedicated to shedding light on student loans and their repayment process — take advantage. Once you have general knowledge of student loans, get more specific information on your own loans: the total cost, interest rates, payment deadlines, etc. If you need more information specific to your student loans, enlist the direct help of your lender to receive statements holding all the information you will need. Keep any and all statements handy so they are easy to find when future questions come up.

2) Be sure about your  interest rates and how they can vary depending on the loan

Interest rates on your student loans will vary depending on the loan type and the first disbursement date of the loan. Make sure you are fully aware of what student loans you have accepted and the interest rate associated with each one

When repaying your student loans, some of your payment will be applying to your principal balance. To be sure about the exact amount going toward your principal balance, contact your loan servicer to confirm your payment. Your loan servicer will be the company that collects your student loan payments, responds to any of your questions, and performs miscellaneous administrative tasks associated with federal student loans on your behalf.

3) Keep up with deadlines and don’t rely on reminders from others 

Another big issue that students often encounter when it comes to student loan repayment is failing to repay their student loans on time. It’s easy to forget one “small” deadline when there are countless other things going on in your life, especially when loan servicers will not be sending you constant reminders to keep up with your student loan payments.

Likewise, you don’t want to just rely on yourself to remember deadlines mentally as it will be easy for payment deadlines to slip your mind when a friend is getting married the same week or when you are rushing to pay rent. Write your deadlines everywhere you would plan your other priorities out — your personal planner, a wall calendar in your office, your Google Calendar, or Post-it notes on your fridge.

4) Remember that putting off paying loans will ultimately mean more interest in the long run

It may seem simple enough — interest rates add on to your principal balance as time passes. The more time that passes, the higher amount you will have to repay on your student loans. Unfortunately, many college students and graduates forget about this when they actually have their own student loans to pay.

When you are repaying your student loans, you may hear the terms forbearance or deferment, which will allow you to temporarily reduce monthly payments or temporarily stop paying payments. Understand the difference between the two before agreeing to commit to either one.

Deferment will mean that you may not be responsible for paying the interest that will accumulate during your deferment period, depending on the type of loan you are deferring the payments on. With forbearance, you will be responsible for paying the interest that accumulates on all federal student loans.

The eligibility for both varies, but if you are enrolled in college or career school at least half-time, you will most likely be placed into a deferment period automatically for the duration of your enrollment. Take caution into when your deferment period ends (along with post-graduation grace periods) so that you can avoid missing payments once they are expected to be paid once again.

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