In the last few semesters as an undergraduate you may be realizing just how much student debt you have accumulated. It is wise to start making a plan to pay student debt in a timely, efficient manner. While the task may seem foreign, here are some mistakes to avoid when paying student loan debt.
Not knowing your debt load
You should be assessing the accumulated totals and the upcoming monthly payments before you’re contacted to start paying. This way you can set up a plan to pay these debts on time without going under. Avoid this mistake by frequently checking your loan records and making plans for repayment. Start a savings account that will be strictly used for paying off student debt. Put a portion of your monthly income into this account to set yourself up for success when the time comes to pay off these debts.
One of the biggest mistakes you can make is failing to pay a bill. Not only will you be fined for the late payment, but you also could harm your credit score. This is could also be true if you pay ahead; some companies have contracts that require you to make a monthly payment even if you paid more than is required. Read the fine print and get it in writing that you are following the outlined rules. To avoid unwanted fees, enroll in automatic payments to guarantee you won’t miss a payment.
Not updating your contact information
Log in to the site where your student loan records are kept and be sure all your contact information is correct. When the time comes to start paying these bills, notifications will be sent to the provided information. If your address, phone number or email are incorrect, you will not receive important reminders on your bills. Even if your address is wrong and you are not receiving updates, it will still be your responsibility to make timely payments. You could even receive late fees and other fines for falling behind. Check your information and update it as soon as there is a change.
Passing on loans you don’t have to pay back
When free money is placed in front of you, do not pass up the opportunity to decrease tuition costs. If you meet the requirements for a scholarship, take the opportunity and complete the application. No matter the amount, that scholarship will cover educational costs that you don’t have to. Other opportunities may come from FASFA, grants, work-study awards or loans. If these are placed on the table, never surrender the chance for them to be used toward your tuition.
Choosing the wrong repayment plan
There are several different student loan repayments plans available but each company may not offer every one of them. When deciding on a repayment plan, be sure to do your research on which one will be best for you. While all of them work for the same goal of paying student loans, some may require higher interest payments that lead you to pay thousands of unnecessary dollars. Talk with a customer service representative and walk through each plan till you can confidently decide your best option.
Paying your debt as slow as possible
While choosing the correct plan is crucial, this also means not choosing the lowest monthly payment plan just because it means paying less. If you are able to pay more monthly, it will save you thousands of dollars. Otherwise, you will still be paying accumulated interest when you want to spend money on other expenses such as a house or maybe your own children’s education expenses. Choose a plan that is reasonable for your expenses and helps you pay the loans in the most efficient time period.
Not asking for help
The customer service representatives at your loan department are there to help. Whether you need help paying a bill, choosing a repayment plan or answering any other questions, they are there for you. Do not be afraid to reach out and get answers, this is your money and you deserve to know what’s happening to it.