Getting ready for Student Loan Repayment
The U.S. Department of Education has made it crystal clear that payments for federal student loans will resume as of February 1, 2022. Our grace period is almost up!
Whether you’re preparing for student loan payments to resume or you’re preparing to start repaying your federal student loans for the first time, this post is for you. We’re going to break down the 7 steps that you need to take right now so that you can be ready.
If you’re more of the video type, check out the YouTube video above!
Pay attention to your emails.
Be on the lookout for correspondence from the Department of Education or from your student loan servicer about your loans.
Make sure you know who your loan servicer is.
If this is your first time entering repayment and you’re unaware of what or who a student loan servicer is, your student loan servicer is the company that you actually make your payments to and that handles the administration of your loan. There’s been a lot of news around student loan servicers ending their contracts and loans being moved to new servicers. So, even if you were already in repayment prior to March of 2020, now’s a good time to double check. How do you find this information? Log into your account at studentaid.gov, go to “My Aid” and then select “view loan servicer details”.
Review your account information on your student loan servicer’s website to make sure your contact information is up to date. It’s also a good idea to take a few screenshots of your payment history and loan information.
That way you can compare when student loan repayment begins to make sure nothing looks off. This is especially important if your loans are currently with a servicer that is going to be ending their contract soon. You want to make sure all of your information gets ported over to your new servicer correctly. Even if your loans aren’t moving, you want to make sure things are intact once your loans switch back to an active repayment status. Mistakes happen.
Double check your bank account information if you have autopay enabled.
Have you switched bank accounts over the past year or so? Make sure that information is accurate so there are no hiccups or missed payments.
Make sure your repayment plan still fits your financial goals.
You can estimate your monthly payments under various plans by going to studentaid.gov and using their repayment simulator tool. Maybe your financial goals have changed since March of 2020 or your financial situation has changed. You’ll want to make sure that you have a plan that works.
If you’re in a bad financial situation and need to take advantage of loan deferment or forbearance, start looking into that now.
Don’t wait until the last minute. Understand the steps and what you need to do so that you can quickly adapt before you end up potentially missing payments and messing up your credit.
Consider paying down accrued interest by year-end.
This one’s a pro tip of something you might look into doing before the end of the year. Some of you might know that, depending on your income, you might be able to get a federal tax benefit for student loan interest that you’ve paid. This is otherwise known as the student loan interest deduction. I won’t go into the details of this deduction because we previously made a YouTube video about this, so make sure to check that out.
Since many people haven’t made payments all of 2021, there may be interest that’s been sitting on your account. If you have money that you’ve put aside for the purpose of student loan debt repayment, you might want to consider paying down some of that interest by December 31 if it will result in you qualifying for an income tax benefit. That’s something that Meshack and I personally did at the end of 2020, so right now we have no outstanding interest to pay. However, if you do, that’s something to keep in mind.
We dive deep into tackling debt repayment and so much more in our program, MONEY 180™, so if you’re interested in learning more about that, go on and check it out!