A comprehensive understanding of the repayment process for paying back student loans is essential in building a solid financial foundation early on. It’s important to remember that student loans are real loans, just like mortgages on your house or a loan for your car. You must repay student loans even if financial circumstances become difficult or you’re facing unexpected hardships. Unfortunately, they cannot be canceled either!
Payments are made to a loan servicer, which has its own payment process, so if you are unsure about how or when to pay you should check with the company. It is up to you to keep in touch with your servicer and make payments, even if you don’t receive a bill or notice. There are several repayment plans designed to meet your needs and you can choose amongst these to vary the amount you pay and the length of time you have to repay your loans. Certain loans qualify for consolidation – combining multiple loans into one loan – resulting in a single monthly payment instead of multiple payments. There are pros and cons to this, and only certain types of loans qualify for consolidation.
Deferment and forbearance allow you to temporarily postpone or lower payments while back in school, in the military, or if you are experiencing financial hardships or certain other unique situations. In circumstances such as total/permanent disability, certain kinds of teaching service, or closure of the place where you were carrying out your education, your obligation to repay your student loan may be removed.
Most importantly, never ignore default or delinquent notices. Without making regular monthly payments, you will be labeled as delinquent on your loan and risk going into default. This has serious consequences, and your school, the financial institutions that own your loan, your loan guarantor and government officials can take action to recover the money you owe. If you are having trouble making payments or won’t be able to pay in a timely fashion, it’s important to contact your servicer immediately. If you are experiencing a loan dispute, you may be able to resolve it by simply discussing the issue with your loan servicer. If you need additional help, become knowledgeable and be prepared before seeking further measures.