If you graduated in May, your grace period is ending and your first student loan payments will be due any week now. Are you ready? Confused? Scared?
Aaron Weber spoke with Mike and Christa, two of the most experienced student loan counselors with SALT™, about the most common questions borrowers ask when they call them. Check out their answers.
I haven’t gotten a bill yet. How do I know when am I supposed to pay?
It’s good you’re thinking about it. Even if you moved and haven’t gotten the bill, your student loans will still come due. In fact, it’s your responsibility to keep your loan servicer (the billing company) informed about any change of address.
If you haven’t gotten a bill but know your loans will be due soon, you can check with your servicer. If you’re not sure who that is, use the National Student Loan Data System (NSLDS®) to look them up.
(Click here to find out how NSLDS works and what it means for your loans).
I have too many loans! How am I supposed to keep track of all these?
If they’re all with one servicer, it’s actually pretty easy to pay them all at once. And of course, as in the previous question, you can always use NSLDS to track them.
But you can also consolidate them, i.e., bundle them into a single, new loan. Your interest rate will change slightly, as the new rate for the Consolidation loan is a weighted average of the loans being consolidated, rounded up to the nearest 0.125%. In addition, consolidation may extend your payment term. Consolidation isn’t for everyone, but it can be quite useful if you want to keep your loans organized or need to stretch out the repayment timeline.
(Want to consolidate? Read up here.)
This payment is too high! There’s no way I can pay this! What do I do now?
If your payments are a serious burden, there are three ways to fix it.
1. Go over your budget. Are you sure you can’t afford it? We won’t second-guess you, but you should know that the faster you pay a loan back, the less money you spend on interest.
2. Look into a reduced repayment plan. Something like income-based repayment or Pay As You Earn can reduce how much you pay each month. Be careful, though—in many cases, changing your repayment plan means you’ll make payments for a longer time, which increases the total cost of the loan. (Learn about different repayment options for federal student loans here.)
3. Review your postponement options. If you can’t make any payment at all, look into postponing payments with deferment or forbearance.
I’m going back to school, why do I have to pay this now?
Once you are enrolled in school more than half time, you are eligible for in-school deferment. Schools normally apply this automatically, but sometimes you will need to fill out the In School Deferment Form and send it to your servicer.
However, if you are taking off more than 6 months between graduation and enrollment in your new program, or if you are enrolled less than half time, then your grace period will end. That means you will have to make payments or apply to postpone payments in some other way.
(Find out about other types of deferment and forbearance here.)
Got other questions? Just want to share your story or tips for student loan management? Comments are open.