Paying off student loan debt can be a long, complicated and often hard process, one that can put a significant pressure on an individual’s finances, influence major life decisions and put healthy credit at risk. it’s estimated that about seven million of the nation’s borrowers are in default. With so much at stake, how can borrowers best manage their student loan debt?
Below are some key points on how to manage your student loan debt:
1. Know Your Loans
If you need to borrow for school, look first to federal student loans. Private loans are not backed by the federal government and are more risky and expensive than federal loans. All college students should fill out the Free Application for Federal Student Aid (FAFSA). Submitting a FAFSA is necessary for participation in any federal student aid program, even those that do not depend on financial need.
Check out the National Student Loan Data System at www.nslds.ed.gov to find a complete listing of all your federal student loans. You will need your Federal Student Aid PIN to access your information.
2. Stay in Touch with Your Loan Servicer
Loan servicers send lots of important information to borrowers, including information about when your payments begin and how to select a repayment plan. If you miss your servicer’s communications, you may be enrolled in a repayment plan you don’t like or be late on payments. That can be expensive for you.
It is very important that your new phone numbers, email addresses and mailing addresses are updated with your lenders.
3. Pick the Right Repayment Option
You have a choice of several repayment plans that are designed to meet your needs. The amount you pay and the length of time to repay your loans will vary depending on the repayment plan you choose. Please visit https://studentaid.ed.gov/repay-loans/understand/plans for more repayment options.
4. Know Your Resources
- http://www.nslds.ed.gov - The National Student Loan Data System for a complete inventory of your federal student loans.
- http://www.studentloanborrowerassistance.org/ - Information from the National Consumer Law Center, including avoiding and getting out of default and dealing with collections agencies.
- http://www.studentaid.ed.gov/ - Comprehensive federal student aid information and loan repayment calculators from the U.S. Department of Education.
- http://www.studentloans.gov - Tools for managing federal student loans, including access to your account information and repayment estimator from the U.S. Department of Education.
- http://www.consumerfinance.gov/paying-for-college/repay-student-debt - Student loan decision tree from the Consumer Financial Protection Bureau.