Student Loan Repayment

Student Loan Repayment

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Borrowing Mistakes to Avoid Before College

  1. Not evaluating a school's true cost of attendance by taking into account grants and scholarships the school offers, and considering how long it takes the typical student to graduate.
  2. Assuming that you need student loans to achieve your educational goals.
  3. Avoiding all student loans, when getting the education you need for the job you want may require them.
  4. Not filling out the FAFSA for federal financial aid, and not applying for scholarships and grants to exhaust other options before you borrow.
  5. Relying too much on your parents to handle financial aid and college cost matters; it's helpful to know how much each class costs you, now and later.

Borrowing Mistakes to Avoid During College

  1. Constantly changing your major, not considering your career opportunities post-graduation, or over-borrowing based on your chosen major's expected earnings.
  2. Accepting all the loan money you're awarded, especially when making lifestyle changes to save money now could reduce the amount of debt you'll face later.
  3. Not keeping track of all your borrowing, figuring out how much you owe (as you go), and learning what your monthly payments will be before entering repayment; knowing what's ahead may help you decide to trim your budget now.
  4. Not making payments while in school or paying interest now to save money later.
  5. Not reading the fine print about your loans, including information about fees, interest rates, grace periods, etc.

Mistakes to Avoid in Repayment

  1. Missing out on important communication and assistance you may need because you haven't updated your contact information with your servicer or lender.
  2. Extending your repayment period unnecessarily, using forbearance when it's not absolutely needed, or avoiding repayment altogether by just letting your loans become delinquent and/or default.
  3. Failing to take advantage of tax benefits you're entitled to because of your student loans when filing your taxes.
  4. Not being a savvy consumer: take time to learn about new repayment options for federal or private loans that may be your best solution, consider refinancing your private loans, and avoid consolidating federal and private loans together.
  5. Considering all debt equally: you may want to use deferment, forbearance, or extended repayment for your federal loans so that you can pay down higher interest rate loans more quickly.

If you are late on a scheduled payment, you are considered to be delinquent on your loan. If you are more than 90 days late, your delinquency will be reported to national credit bureaus. If you are 270 days late on your scheduled payment, you are in violation of your loan agreement, and it will be assumed that you do not intend to repay your loan. The federal government will buy your loan from your servicer and track you for payment. Defaults are reported to national credit bureaus and remain on your credit report for seven years. This may affect your ability to obtain an auto loan, credit cards, or other financing. Other consequences include:The entire unpaid amount of your loan, including interest, may become immediately due and payable.

  • The federal government may collect loan payments from federal and state income tax refunds, garnished wages, or state lottery winnings.
  • You will be ineligible to receive any additional federal or state financial aid funds (Federal Pell and Supplemental Educational Opportunity Grants, Work Study, and the Perkins, Subsidized and Unsubsidized Stafford Loans, and/or PLUS loans) at any institution.
  • Your default will have an effect on the future of this loan program and could jeopardize the educational opportunities of future students.

What are Deferments and Forbearances? A deferment allows you to temporarily delay repayment of your student loans for a specified period of time. There are many different situations that would make a student eligible to defer their payments. The most frequently used deferments are because of unemployment, enrollment in school, or economic hardship. A forbearance is an option available to students who are not eligible for a deferment. If you are financially unable to make your student loan payments, you may be eligible for this temporary suspension or reduction of payments. Forbearance may be granted if federal student loan debt exceeds 20% of the borrower's gross income. Forbearance will not eliminate any prior derogatory credit history. Each borrower is allotted up to five years of forbearance time granted. For deferments, student loan borrowers are given up to 36 months. Not every deferment has expiration. For example, in-school deferments are unlimited as long as the student is enrolled at least half time. Military deferments also do not have an expiration.

Links to commonly used forms

Economic Deferment

Unemployment Deferment

Forbearance

Federal Guide to Defaulted Student Loans

The US Department of Education Debt Collection Service publishes a guide called Guide to Defaulted Student Loans to help student repay their defaulted student loans. It includes information about repaying a defaulted student loan, loan consolidation, the consequences of default, collection cost, resolving disputes, ineligibility for further Federal student aid, and related topics. For more information on repaying a defaulted loan, call 1-800-4-FED-AID (1-800-433-3243) or 1-800-621-3115

Further Assistance:

Oklahoma College Assistance Program - www.readysetrepay.org

Types of Repayment Plans

Find more information on repayment plans.