While you don’t get to choose a student loan servicer for your federal loans, when you choose a private student loan lender you are also choosing a student loan servicer so it’s important to choose a private student loan lender carefully.
When choosing a private student loan lender, the most important things to look for are fees and interest rates. In order to check this, you may need to do some shopping around. The rates you will find are just like other loans. And will depend on the market interest rate and your credit history. Some lenders require a co-signer, such as a relative or parent, who will also shoulder responsibility if you stop making payments. This means that your payment activity impacts their credit score, which is not something you really want to do to the co-signer. When looking at the costs for the private student loan lender, consider the interest, origination fees, early payment fees, and the lender costs.
What to Do Once You Find Your Student Loan Servicer?
Once you know who your servicer is you should then create an account on their site. In order to do this, you usually need to create a username or password. And then share relevant information, such as your Social Security Number, name, and address. You will also need to secure your account with some security questions. When you have registered, you are able to connect your bank information and then make payments directly. You are also able to send checks but it can be much easier to pay online.
There can also be other benefits to paying online. For example, you may get a reduction in your interest rate if you sign up for automatic payments. If you don’t want to sign up for autopay then see if you are able to sign up for online alerts so you are able to be reminded when a payment is due so you never miss a payment.
How Your Student Loan Servicer Can Help You?
Your student loan servicer can help you with many things once you track them down:
- update your contact information
- check your loan status
- find details on payment amounts
- help you make your payments
Being proactive about reaching out to your servicer and managing your loans is a good strategy to correct any issues, avoid errors, and help you keep your payments on track.
Forbearance with Your Student Loan Servicer
It is not unusual that you can not pay your student loan. According to some student debt statistics, the total amount of student loan debt in 2020 is over $1.67 trillion. If you are unable to pay your student loans then your loan servicer could suggest forbearance. Forbearance is the option to delay payments and you don’t have to make payments while loans are in forbearance. It sounds pretty great but it may not be the best option. While in forbearance, your loans still accrue interest. The interest is added to your balance once your loans are out of forbearance and you are back to making regular payments.
This means that unless you can cover the interest while your loans are in forbearance, your balance will be higher as you start to enter repayment. Since the interest keeps accruing, forbearance should be only temporary and a short-term solution and not a long-term solution.
Deferment with Your Student Loan Servicer
This can be an option with your student loan servicer. Deferment actually excuses you from making a student loan payment for a certain period of time because of a condition in your life, such as hardship, unemployment, or returning to school. Unlike forbearance during this time, interest doesn’t accrue. You can usually qualify for deferment on a federal student loan if there are specific conditions and criteria for the loan time and you aren’t more than 270 days behind on your loan payments. You can defer student loans for only so long but usually, the maximum is for three years total. In order to apply, you need to send your servicer the right application and the necessary documentation. Your servicer needs to grant you deferment if you qualify but keep making payments until you are officially approved.
There are Different Types of Deferment Depending on Your Needs
- In-School Deferment: This deferment is when you pause your loan payments while you are enrolled in college at least half time and the six months after you leave school or graduate. If you qualify then you should automatically get this but if you don’t, ask the enrollment office to send the information to the servicer.
- Unemployment Deferment: In order to qualify for this, you will need to be unemployed and getting unemployment benefits, as well as diligently seeking full-time work. Many borrowers can get up to 26 months of this type of deferment but you will need to apply every six months.
- Economic Hardship Deferment: You can qualify for economic hardship if you are getting federal or state assistance, such as through Temporary Assistance for Needy Families, or if you are not working full time and earning a monthly income of less than the poverty guidelines for your state or volunteering for the peace corps.
- Military Deferment: If you are on active military duty then you can postpone payments. Your service needs to be related to a military operation, national emergency, or war in order to qualify. You are able to qualify for this deferment as long as you are on active military duty. You are also able to use it for 13 months after the service ends or you return to school.
- Cancer Treatment Deferment: Cancer patients that have student loan debt can also get a deferment during treatment and for six months following the conclusion of treatment.
- Other Types of Deferment: Other private lenders will also let you defer student loans while in the military or school. Be sure to contact the lender for eligibility details and to find out how to apply.