Student loan | 6 Things You MUST Know About Repaying Your Student Loans | ED ...

6 Things You MUST Know About Repaying Your Student Loans | ED ...

Posted: 17 Oct 2014 07:33 PM PDT

When it comes to repaying your federal student loans, there's a lot to consider. By taking the time to understand the details of repayment, you can save yourself time and money.

REMEMBER: You never have to pay for help with your federal student loans. If you have any questions at all, contact your servicer. They provide FREE help.

This should help you get started.

When do I begin repaying my federal student loans?

You don't have to begin repaying most federal student loans until after you leave college or drop below half-time enrollment. Many federal student loans will even have a grace period. The grace period gives you time to get financially settled and to select your repayment plan. Note that for most loans, interest will accrue during your grace period.

Your loan servicer or lender will provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.

Whom do I pay?

You will make your federal student loan payments to your loan servicer*, not the U.S. Department of Education (ED) directly. ED uses several loan servicers to handle the billing and other services on federal student loans. Your loan servicer can work with you to choose a repayment plan and can answer any questions you have about your federal student loans. It's important to maintain contact with your loan servicer and keep your servicer informed of any changes to your mailing address, e-mail, or phone number so they know where to send correspondence and how to contact you. How much do I need to pay?

Your bill will tell you how much to pay. Your payment (usually made monthly) depends on

the type of loan you received,
how much money you borrowed,
the interest rate on your loan, and
the repayment plan you choose.

You can use our repayment estimator to estimate your monthly payments under different repayment plans to determine which option is right for you. Just remember, if you would like to switch repayment plans, you must contact your loan servicer.

How do I make my student loan payments?

There are several ways you can submit payments to your loan servicer, including options to submit your payment online through your loan servicer's website.

TIP: Your servicer may offer the option to have your payments automatically withdrawn from your bank account each month. You may want to consider this option so you don't forget to make your payments.

What should I do if I'm having trouble making my student loan payments?

Contact your loan servicer as soon as possible. You may be able to change your repayment plan to one that will allow you to have a longer repayment period or to one that is based on your income. If switching repayment plans isn't a good option for you, ask your loan servicer about your options for loan consolidation or a deferment or forbearance.

Note: Several third-party companies offer student loan assistance for a fee. Most of these services can be obtained for free from your loan servicer.

What happens if I don't make my payments?

Not making your student loan payments can result in default, which negatively impacts your credit score. This may affect your ability to borrow for things like buying a car or purchasing a home. Your tax refunds may also be withheld and applied to your outstanding student loan debt. There is never a reason to default. The Department of Education offers several options to ensure that you can successfully manage your student loans. If you're feeling overwhelmed or having difficulty making payments, contact your loan servicer for help.

*If you are repaying federal student loans made by a private lender (before July 1, 2010), you may be required to make payments directly to that lender.

Nicole Callahan is a digital engagement analyst at the Department of Education's office of Federal Student Aid.

Federal Agency CFPB Offers New Tools to Student Loan Borrowers ...

Posted: 16 Oct 2014 09:02 AM PDT

Patrick Lunsford October 16, 2014 http://www.insidearm.com/daily/featured-post/federal-agency-cfpb-offers-new-tools-to-student-loan-borrowers-in-financial-distress/

The U.S. financial watchdog Consumer Financial Protection Bureau (CFPB) Thursday released a new set of tools student loan borrowers can use if they run into trouble making payments on their accounts.

The federal agency's goal in the release is to help distressed borrowers avoid defaulting on their student loans and going into collections.

The CFPB released a sample letter that consumers can edit and send to their student loan servicer to request lower monthly payments and information on available repayment plans. Borrowers can download the sample letter to send by mail, or simply cut and paste the text into their servicer's website. The letter specifically requests monthly payments that would allow borrowers to meet their other living expenses.

Download the CFPB's sample letter (.doc format)

The CFPB has also developed a sample financial worksheet to assist borrowers in determining maximum funds available to pay their student loans. Figuring out how much one can reasonably afford each month is often difficult for young adults that have not had to set a household budget previously. The Bureau is hoping that the budgeting help can keep loans current.

Download the CFPB's financial worksheet (.doc format)

The CFPB also encouraged student loan borrowers to use its existing Repay Student Debt tool, an interactive "wizard" that steps debtors through the many options available to make payments.

The publicizing of the new tools comes in conjunction with a report also released Thursday by the federal agency. The 2014 CFPB Student Loan Ombudsman's Annual Report notes that the Bureau received a sharp increase in complaints from student loan borrowers that private lenders were not "providing concrete loan modification options."

The report analyzed more than 5,300 private student loan complaints between Oct. 1, 2013 and Sept. 30, 2014, an increase of 38 percent over the previous year. It highlights that many consumers expressed a commitment to repaying their loans if they could qualify for a payment plan that reflected their current financial circumstances.

But many of these borrowers are being driven to default because no viable repayment options are available to them.

When a consumer defaults on their private student loan, the whole balance may become due in full, immediately. This usually causes damage to a consumer's credit profile. It can also negatively affect a consumer's ability to pass a background check for a job, obtain housing, and impede access to other forms of credit.

Rohit Chopra, the CFPB's Student Loans Ombudsman, noted in a blog post that "Although some companies are willing to help borrowers during a time of financial distress, unfortunately, not all private student loan companies offer assistance when consumers are struggling to repay their loans. Using [these tools] may help you get a clear answer and avoid long hold times and transfers from one call center representative to another."