4 Student Loan Questions You Shouldn’t Be Afraid To Ask Student loan ranger
Many consumers are ashamed of what they don’t know about their student loans. This is understandable, as it is easy to be overwhelmed by the volume of information and advice available online these days. Here are four seemingly silly student loan questions that aren’t:
- How do I find my interest rates?
- Do I really have to pay off my student loans?
- I can’t afford to pay off my student loans. Can I reduce my payments?
- Can’t I just combine all of my loans?
How do I find my interest rates?
Like most loans, student loans have higher interest rates. In this case, the rates are set based on when the loan was first disbursed, the type of loan, and whether you were an undergraduate or graduate student, for example.
Once established, the fixed rates for student loans will not change. Confusing? Do not worry. Simply visit the National Student Loans Data System, or NSLDSand follow the login instructions for the MyStudentData download to access all of your federal student loan details.
the interest rates on private student loans are set by the lender, so you will need to contact your lender to find out the details of your loans. Private student loans offer fixed and variable interest rates, which should be monitored on your statements so that you can maintain an accurate monthly budget.
Do I really have to pay off my student loans?
Yes, you have to pay off your student loans. Federal student loans are not subject to the various limitation periods that states impose on private loans; and even if the status expires, a collector may continue to contact you to ask you to make voluntary payments.
If you miss a payment, your loan becomes past due, and the loan manager will report the delay to the national credit bureaus if the delay lasts longer than 90 days. This will have a negative impact on your credit.
In addition, default on a federal student loan occurs after 270 days without payment. The federal government can withhold your salary and tax refund, and federal sources of income, such as Social Security, can also be foreclosed. It’s nothing personal. The government needs to get its money back from you to lend it to next year’s students.
Private lenders will try to get money from your co-signer first, and they can take legal action as well, as your debt increases as collection costs rise. Each lender has their own policy as to how they will attempt to collect from you, but this process is never pleasant.
I can’t afford to pay off my student loans. Can I reduce my payments?
If you have federal student loans, there is a good chance that you can reduce your monthly payments by opting for an income-based repayment plan. By completing an application and recertifying your information each year, you can have a new payment calculated that should match your budget.
Keep in mind that monthly income-based payments are lower, but as interest will continue to accumulate, it will take longer and cost you more to pay off your total debt.
If your income is particularly low, it is quite possible that your loan balance will increase while you are income plan. If so, don’t panic. You still have to keep housing, eat, and get to work somehow – those bills come first. But staying up to date on your student loan by making payments, even very low payments, can help preserve your credit and avoid unnecessarily burning deferment and forbearance options.
If you can’t pay your private student loan repayments, talk to your lender. They don’t usually offer income-based plans, but they can offer alternative repayment plans on a case-by-case basis. Keep in mind that they have no obligation to do this, but they want their money. Defaulting on your loans is the last thing anyone wants in this situation.
Can’t I just combine all of my loans?
If you think about consolidate your student loans, there are pros and cons to consider. Of course, you will have the benefit of only one monthly payment, but it can be higher than your current payments.
Consolidation can also have an impact on your debt relief plan. For example, let’s say you are a candidate for Public service loan forgiveness, a program that cancels the balance of eligible federal student loans after making 120 eligible monthly payments while working full-time for a government or non-profit organization. If you consolidate your loans, you will return to payment # 1 as you walk towards 120 qualifying payments.
Keep in mind that the Department of Education will consolidate your loans into a direct consolidation loan for free. Third party companies will charge you unnecessary fees.
Your private student loans can also be consolidated by refinancing. It can lower your rates and your monthly payment, but it depends on the company you choose, your credit score, and a few other factors. You can even refinance your federal student loans and private student loans together through a growing number of private lenders, but if you do, you will lose all of the options and benefits of the federal repayment plan.
Most importantly, do your research. People tend to make quick decisions to solve their immediate problems, often without complete information. It is your responsibility to understand all of your options, and it can be a daunting task at times, but never don’t be afraid to ask questions about your student loans. There are many professionals who can help you.