by Repayable | Sep 4, 2017 | Getting started, Money Matters
Image By:Nelson Roth
The solar eclipse is far behind us and if you followed the rules you don’t have any lasting eye damage. Unfortunately following the rules in college doesn’t necessarily prevent you from having lasting financial damage in the form of student loan debt.
But never fear, Repayable is here to help you figure out the strategy that’s right for your financial situation so you can beat back your debt.
Read this if you’ve been too nervous to look at your student loan balance but you’re ready to try to do something about it. Estimated read time ~3 min.
If You’re in College and Have Federal Loans
The best way for you to see your total federal loan amount while you’re still in college is to go to the National Student Loan Data System (NSLDS). They’re your one stop shop for all your federal loan amounts. NSLDS collects their information from the Direct Loan program, schools, and the Department of Education. This information is a little older (about 120 days) so isn’t the best resource if you’re actively in repayment but works great while you’re still in college.
If You Have Private Loans or If You’ve Already Graduated
You can find out who your lender is by checking your credit report, your lender will be listed, or by asking your college’s financial aid office for help. Private loans aren’t listed in the NSLDS so this is the best place to find private loan balances. Your current loan servicer will have the most accurate and up-to-date information on your loan balance which is what you need if you’re in repayment.
So How’d it Go?
You looked at your balance, you stared right at it, you empowered yourself with a real number. So what’s the verdict? Is it more, less, or about the same amount you thought it was? I remember when I graduated I thought I had borrowed $118,000 then realized $10,000 of interest had accrued on my unsubsidized loans… it was such a bummer but very quickly helped me realize the financial burden of interest! Right now I owe $71,150.10. Share your experience with owning your number on the Repayable Facebook Page or in the comments below!
Additional Resources
NSLDS FAQ
How Much Do I Owe in Student Loans Article
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by Repayable | May 15, 2017 | Getting started, Money Matters
Read this if you’re panicking about making student loan payments and you are looking for temporary relief from student loan debt payments.
Estimated read time ~5 minutes.
Student loan deferment or forbearance can give you temporary relief from the financial stress of student loan payments. Here’s what you need to know to decide if these options are right for you.
Deferment
Deferment allows you to temporarily stop making payments on your student loans. While in deferment the federal government pays the interest accruing on your subsidized federal loans. That means you don’t earn interest or compounding interest on those loans during your period of deferment.
In order to be eligible for deferment borrowers must meet specific criteria. You can find the comprehensive list and forms for each type of deferment here. In a nutshell you’re eligible if you’re still enrolled in school half-time, if you’re in grad school or fellowship, if you’re unemployed, if you’re experiencing economic hardship or in the peace corps, if you’re currently or were recently on active military duty for war, military operation, or national emergency.
Deferment is the ideal choice because you will never have to pay for interest accrued on subsidized loans during the period of your deferment. You can find the
Forbearance
Forbearance allows you to temporarily stop making payments on your student loans. While in forbearance interest continues to accrue and compound on all types of loans including subsidized.
There are two types of forbearance, general and mandatory. Forbearances aren’t granted for longer than 12 months so if you are still experiencing hardship or are eligible for mandatory forbearance after that you will need to re-request forbearance.
General forbearance is at the discretion of your loan servicer and can be granted for reasons such as financial difficulty, medical expenses, employer change, and other reasons suitable to your lender.
Mandatory forbearance is required to be granted by your loan servicer if you meet eligibility requirements. These requirements can be medical or other health-professional residency, total monthly amount of student loan payment is 20% or more of your gross monthly income, some teaching and americorps positions, some military and national guard situations
You can find the general forbearance request here.
Alternative repayment plans.
Do you really need to stop making payments on your student loans or is there other room in your budget to make sacrifices? Take a calm look at your finances and find out if a lower payment is really what you need rather than no payment. You can accrue a significant amount of interest in forbearance. Let’s look at 12 months forbearance on a $36,000 loan with 4.8% interest. Your loan balance after 12 months forbearance will be $37,728. That’s an extra $1,728 you now owe and 4.8% relative increase in the cost of your education. Choose wisely, income-based payments also allow you to work toward eventual loan forgiveness after 20-25 years of payments.
Let me know what your biggest fears are about student loan repayment in the comments below, on the Repayable Facebook Page, or by sending me an email jeni@repayable.org. I’m here to help. With the information you need, you can make your student loans truly repayable.
Additional Resources:
Deferment and Forbearance
Deferment Eligibility
Forbearance Request Form
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by Repayable | Apr 17, 2017 | #Millenniallife, Getting started, Money Matters
Read this article if you know your total debt load and want to figure out how bad it actually is.
Estimated read time ~ 9 minutes.
By now you’ve figured out how much you owe, what type of loans you have, and what repayment plan you’re in. Now it’s time to assess your financial situation. You have to draw conclusions about the impact your student loans have on your finances in order to set goals that meet your unique needs.
So how do you know if your student loan debt sucks hard or just sucks a little? The answer is the debt to income (debt:income) ratio. This handy little ratio helps quantify your debt load relative to your income. Think of it this way, $40,000 feels different if you make $28,000 per year than if you make $100,000 per year.
A side note that the debt:income ratio I talk about is not the same as the debt:income ratio creditors use to determine your financial viability. This ratio focuses on total student loan debt load and annual income. The common debt:income ratio focuses on monthly debt payments and monthly income and is reported as a percentage.
How to calculate your debt:income ratio.
- Grab your total debt: we’ll use $40,000 for this example.
- Estimate your total annual income: we’ll use $28,000 for this example.
- Divide your debt by your annual income: $40,000 ➗ 28,000
- Your quotient is your debt:income: in this case it’s about 1.4
What does your debt:income ratio mean?
Your debt:income gives you a quick way to assess the affordability of your debt. In general the higher your debt:income the harder it feels to repay your debt. As you make more money it feels easier to repay your debt with the same or even higher debt:income.
For example if your student loan debt is $150,000 and you make $100,000 per year it’s easier to make your payments than if you have a debt total of $45,000 and make $30,000 per year. Why is this the case? Essentially the more money you make, the more you have left after paying for basic costs of living. You may elect to pay for a higher quality of life as you make more but there’s less financial pressure on the basics like groceries, transportation, and health insurance.
What’s a good debt:income ratio?
The answer is, it depends on how much you make. If your ratio is less than 1:1 it will likely feel affordable. However if you make a salary that’s high enough to cover cost of living and then some a ratio of 1.5:1 may feel affordable. Generally, I would aim to cap your debt:income ratio at 1.5:1.
What to do with your debt:income ratio.
So what do you do if your debt:income ratio just isn’t that great? Well, there are only two sides to this equation, your debt and your income. The only thing you can do with your debt once you’ve borrowed it is repay it. The flexible side of this equation is your income.
There are a ton of resources out there on ways to make extra money. You can try to move to a better paying position in your company, switch to a better paying field (that doesn’t require more education and debt), ask for a raise, or start a side hustle. There are a lot of resources out there for making any of these moves. I’ll link up my favorite side hustle podcast at the end of this post.
What did your debt:income ratio reveal to you? Did it bring up more questions than answers? I would love to hear your thoughts on the Repayable Facebook Page or in the comments below. As always you can send an email to me jeni@repayable.org.
Additional Resources
Side Hustle School Podcast
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by Repayable | Mar 6, 2017 | Getting started, Money Matters
Read this article if you don’t know your total amount of student loan debt. Estimated read time ~ 2 minutes.
The first step to making your student loan debt repayable is to know exactly how much of it you have. While it’s easier to deny reality and maintain only an estimate of your total debt load, it’s imperative to take control of your debt by facing the exact number.
Start with Federal Loans
To figure out the total amount of federal student loan debt you can go to the National Student Loan Data System (NSLDS) website. This website is operated by the Department of Education and serves as a central data base for student aid. NSLDS gets their information from schools, the Direct Loan program and other Dept of Ed programs. This is your one stop spot to find your federal student loan total.
You will need your FSA ID to access the NSLDS. If you don’t have that you can set one up. One thing to note is that the information on the NSLDS tends to be older (up to 120 days) so you will want to obtain a balance from your loan servicer if you’re making payments.
Contact your Loan Servicer(s)
This works for both federal and private student loans. You can find out who your lender is by checking your credit report, your lender will be listed, or by asking your college’s financial aid office for help. Either way your current loan servicer will have the most accurate and up-to-date information on your loan balance.
Now that you’ve empowered yourself with a real number what’s the verdict? Is it more, less, or about the same amount you thought it was? I remember when I graduated I thought I had borrowed $118,000 then realized $10,000 of interest had accrued on my unsubsidized loans… it was such a bummer but very quickly helped me realize the financial burden of interest! Right now I owe $81,799.82. Share your experience with owning your number on the Repayable Facebook Page or in the comments below!
Additional Resources:
https://www.nslds.ed.gov/nslds/nslds_SA/public/SaFaq.do
https://studentloanhero.com/featured/how-much-do-i-owe-in-student-loans/
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by Repayable | Feb 20, 2017 | Getting started, Money Matters
Read this article if you’ve borrowed money to attend college and aren’t sure what type of loans you have. Estimated read time ~3 minutes.
You need to know the type of student loans you have in order to choose the right repayment option and make the most of your money.
So how do you know what type of student loans you have? First off there are two types of student loans “federal” and “private”. Federal loans are funded by the U.S. government and come with a standard set of borrower benefits and fixed interest rates. Private loans are made by banks and other private lending institutions and often don’t carry the same benefits as federal loans. Determining which type of loans you have is easy if you follow the directions below.
Ask your loan servicer(s).
If you have more than one loan servicer that’s a good sign that you have at least one loan is with a private lender. When you borrow federal loans they will be serviced by the same company. Your loan servicer(s) will let you know if you have federal or private loans with them. Just give them a call or send them an email.
Go to the National Student Loan Data Services (NSLDS) website.
This step require a little effort on your part because you will need an FSA ID (you can set this up when you go to the website). Once you’ve gotten that though it’s very easy to track your loan information. Your federal loans will be listed there.
Call the Federal Student Aid Information Center (1-800-433-3243).
The FSA information center employs counselors who can help you find out the type of loan you have when you call.
Check out the name of your loan.
Here’s the list of federal loans: Stafford, PLUS, Perkins, FFEL, William D. Ford Driect Loan Program (aka Direct Loans).
Other things that hint at the source of your loan.
If you needed a credit check or a cosigner that’s a strong sign it’s a private loan. If your repayment period begins while you’re still enrolled in adequate credit hours, it’s a private loan.
So what kind of loans do you have?
I’m curious to know what type of loans you have? Do you have federal, private, or a mix of each? My loans are completely private now that I’ve refinanced but prior to that were all federal. Comment below or head over to the Repayable Facebook Page and let me know what type of loans you have!
Additional Resources:
https://studentaid.ed.gov/sa/types/loans
https://studentaid.ed.gov/sa/types/loans/federal-vs-private
http://www.studentloanborrowerassistance.org/start-here/what-type-of-loan-do-i-have/
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by Repayable | Feb 6, 2017 | Money Matters, Refinancing
Refinancing student loans is a great way to make your money work for you by paying less interest. A lower interest rate means more of your payment goes to principal. This strategy gets you out of debt faster with no additional financial sacrifice on your part. So what’s the catch? It seems like it’s too good to be true, but it’s not, as long as you do your homework.
Remember, student loan debt is a 1.4 trillion dollar market. The companies that offer refinancing have a lot of money to make, even at interest rates lower than your federal rates. Refinancing companies also cherry-pick the best borrowers so they can take the least risk and earn the most money. The business model makes sense and fits the market.
Of the multitude of companies vying for your debt, how do you bring the best to the top? I propose emailing each refinancing company’s customer service department and asking the following questions.
How does your company protect my financial information and identity?
This question is there for your own peace of mind. You provide a lot of sensitive personal identity and financial information to these companies so you want to make sure they are diligent about keeping that information protected.
Are there any application fees or fees for early repayment?
Don’t pay these fees, ever. If a refinancing company has either of these, cross them off your list of options.
What borrower benefits does your company offer?
This is the goldmine of information. Many companies will have this information somewhere on their website but it’s helpful to get a succinct list. These benefits can be the tie breaker for companies offering similar refinancing rates.
After I refinance my student loans with you, will your company sell my loan to another company?
This question is important because you want your loan to stay with the same servicer so you get the same benefits you vetted them for in the first place.
What happens to my loan if I die?
Federal student loans are discharged (aka forgiven) if you die. However, that isn’t always the case with private lenders or refinancing companies. If you have a co-signer it’s likely they will have to repay your debt and perhaps the total bill all at once. This answer determines a lot of your financial planning. Essentially, if your debt will not be discharged upon your death you need a term life insurance policy to cover the balance.
An important note, if you or someone you know is in a crisis, whether or not you are thinking about killing yourself, please call the National Suicide Prevention Lifeline at 1-800-273-TALK (8255).
How are extra payments allocated?
You want to know if your extra payments are allocated to principal only or if they’re allocated to principal and interest. This isn’t so much a deal breaker as it is information you need during repayment. Some companies will have continuously accruing interest and your extra payments will first be applied to the interest that has accrued since your last payment.
What happens if I need to adjust my monthly payments?
This question gives you a sense of the companies flexibility with monthly payments. It’s important to know the steps you need to take in order to adjust payments in case that scenario arises. Many companies offer the ability to change your monthly payments if you need to. If you anticipate inconsistent monthly income this is a crucial question.
If market interest rates improve, can I re-refinance through your company for a better rate?
If the market interest rates improve dramatically it’s nice to have the option to lower your rate to match. On the flip side, if you choose a variable interest rate it’s nice to know if you can change to a fixed rate if the market interest rate starts to jump up. Follow-up questions to go with this include: “What are the requirements for re-refinancing and how do I do that?” and “Is there a fee for re-refinancing?”
The answers to these questions can help you confidently choose the best student loan refinancing company for your needs. For more reading on refinancing check out Refinancing as a Resident, Four Refinancing Disasters to Avoid, Three Surprises When I Refinanced, and A Millennial’s Guide to Earnest.
What’s keeping you from refinancing your student loans? Let me know in the comments below or on the Repayable Facebook Page.
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