November 16, 2015 12:58 am
“Student loan repayment is not something you want to put off,” says Steve Trumble president and CEO of ACCC. “Delinquency and default destroy credit and can create problems that follow you throughout your life—making it more difficult to secure a loan or rent an apartment. In some cases, defaulting also allows the government to intercept your tax refunds or garnish your wages or retirement benefits. Defaulting on a student loan is the worst scenario, and it’s important that consumers speak to their lenders before it gets to that point.”
Depending on their line of work or financial situation, a student may be eligible for student loan forgiveness. In order for a loan to be discharged, the borrower must be experiencing circumstances beyond their control.
To better manage repayment of your student loans and avoid default, ACCC recommends:
1. Understanding your loans and loan agreements – It is important to understand the types of student loans you have, the variety of student loan repayment options available, and different programs offered to federal and private loan borrowers. Read your promissory note, which is a legal document.
2. Making payments on time – Making payments on time is not only the best way to avoid default and eventually pay off your loan; it’s an excellent way to build credit. Building good credit will help when it comes time to make a big purchase, such as buying a house.
3. Creating a budget – Create a post-college budget that includes all expenses, from credit card payments to utilities and groceries. By creating a budget and sticking to it, you can ensure enough savings to be able to pay your loans on time.
4. Keeping good records and tracking your loans – Track all payment schedules and keep a paper record of every monthly payment. Utilize the ability to manage your loans online in order to stay up to date.
5. Addressing any financial challenges quickly – If you’re having trouble making your monthly payment, don’t wait to address the problem. Research your options and talk to your lender. A borrower is usually considered in default if he or she has failed to make a loan payment for 270 days or more. Don’t let it get to that point. You may be able to switch repayment plans, consider an income-driven repayment plan, change a payment due date, or secure a deferment or forbearance.
Published with permission from RISMedia.