Primary lenders. Secondary markets. Repayment. Forbearance. Deferment. Reduction. Rehabilitation. Ugh--it’s all so confusing!

Let’s be straight with ourselves. Managing the accounts for money that you’ve borrowed and already spent is a challenge. You no longer have the funds and it may even have been a few months since you last had contact with your bank, lender or guaranty agency. In fact, your student loan may even have been sold to a secondary buyer since the last time you spoke with someone about it. What do you do?

• When you take out a student loan, make note of the lender and guaranty agency. These two agencies are your primary contacts for your loan.
  
• Read everything your lender or guarantor sends you—no matter if its just a notice that they’ve received your latest enrollment verification.
  
• Track your loans—primary lenders (the bank, credit union or other lender you originally took your loan out through) often sell educational loans to secondary markets (other financial institutions). You’ll need to keep up with which agency currently holds your loan(s).
  
• If your enrollment status changes (i.e. you drop below half-time enrollment, change schools, or leave school), immediately contact your lender. Changes in status can impact your loan status.
  
• Be aware of your student loan repayment options.
  
• If you are in deferment or forbearance, make note of the date this status begins and the date it is scheduled to end. If you need to continue your deferment or forbearance, most lenders will require you to provide documentation prior to the end of your current deferment or forbearance period.
  
• If you are in repayment, make sure that you pay on time. Late payments impact your credit rating and lenders will also usually tack on late fees.
  
• If you are unable to make a scheduled payment, immediately contact your lender. Depending on your circumstances and the type of loan you have, you may be eligible for a temporary reduction in payment amounts, a forbearance or a deferment. Do not allow more than a month to go by without making contact with your lender regarding your financial situation. Failure to do so for an extended period could result in your lender accelerating your loan (calling the whole note in early) or placing your account into a default status.
  
• If for some reason your loan is placed in default, contact your lender regarding opportunities for remediation. Defaults on loans, especially federal loans, can impact your paycheck, ability to collect tax refunds, ability to collect lottery winnings, etc. Defaults on loans also negatively impact your credit and can prevent you from qualifying for financial aid. Many lenders have plans in place that will allow you to make good on your loan, even after a default occurs. But its up to you to take this step.
  
• Don’t assume that any process related to your loans, even something as simple as enrollment verification, is automatic. If at any time anything in your life changes (academically, financially, or physically) that impacts your ability to continue in a specific status or make payment, immediately contact your lender and see if they will work with you to keep your account in good standing.
  
• If you have pre-existing federal loans with high interest rates, contact your lender to see if you can re-finance. U.S. lenders are currently offering re-finance and consolidation options with very good interest rates.
  
• If you are considering consolidation, ask your lender if there are any of your existing loans that you cannot consolidate. Some loans (i.e. state- or institutionally-funded loans) may not be eligible for consolidation.
  
• Before making a final decision regarding consolidation, consider whether you will need to take out any student loans in future and whether this consolidation will impact your ability to qualify for future loans; and whether you will be able to add these future loans to those you already have consolidated.

Remember, you are the manager of your student loans; and in the end, you are the one responsible for keeping up with your loans and making sure your accounts remain in good standing.

Until next time! Lynn Byrne

For more information on student loan management, visit the exit interview counselor in the financial aid office at your university or check out the U.S. Department of Education’s Federal Student Aid site.