The New York Times published a recent piece called The Beginner’s Guide to Repaying Student Loans in which they mention that one-fourth to one-third of borrowers are late on their very first student loan bill and it goes downhill from there with 35% of student loan debtors being 90 or more days delinquent. NYT calls this a “normalization of tardiness.”
The paper credits this issue (as do we here at Tuition.io) to misinformation on behalf of student loan borrowers. There seems to be a disconnect for far too many young people on the ramifications of borrowing and exactly what their future financial obligations will be. Many borrowers say they weren’t sure of how much they owed until they got their first statement after graduating and this is far too late.
While it seems to be true that most colleges are not doing their utmost to educate and warn students, the bottom line is that it is the student’s responsibility to keep track of their debt and to pay what they’ve committed to. Even if you’ve already graduated, it’s not too late to educate yourself on your debt and how to better manage it. If you’re just beginning to borrow, it’s essential that you learn now.
One of the first things to do is to find out what you owe. Tuition.io can help with this. Sign up for our free student loan tool so you can see all your loans in one easy dashboard, payments on each and your total monthly obligations. You can also check out the impact of opting for a cheaper plan like Income Based Repayment or Pay As You Earn or how much faster you can be debt-free if you pay more faster.
Here’s what you need to do to make sure you don’t start out late and don’t end up taking a beating on your credit report, being garnished or in over your head.
#1 Start paying now if you can afford it – don’t wait for your grace period to be done after you graduate. Start paying as soon as you get your first paycheck.
#2 If you can’t afford your debt, definitely don’t ride out your grace period – go ahead and apply for IBR or PAYE now so you won’t be in over your head.
#3 If you’re still in school, make interest payments now if you can to diminish what’s accruing and to decrease the balance you face when you graduate.
#4 Don’t borrow one penny more than you need. Get a job, cut your costs, graduate as fast as you can and get through school as cheaply as possible
#5 Always know what you owe. Use our student loan tool to track your debt and make sure your payments are posted properly to stay on course.
#6 Educate yourself. We offer a free Student Loan Help Center (BTWs – all our tools are free!) that will explain every facet (every single one) of your student loans, repayment options, forbearance, default, etc.
To sum up, check yourself before you wreck yourself (and your credit rating, job opportunities and financial future). Be sure to read our blog frequently for loads of tips on paying your student loans and also check out our Ultimate Insider’s Guide to Private Student Loans to learn all about private lending options.