Student loan delinquency or default statuses can seem intimidating. If you’re not sure what they are, how to avoid them, or how to get rid of them, read on! Here are 6 ways to avoid student loan delinquency and default.
After graduating from college, I was stuck with a co*cktail of student loans that I didn’t want to think about.
The loan officers at my school made it sound so simple: if I just paid off the minimum on my loans each month, I would be fine. I tuned out most of the exit counseling my senior year, ignoring terms like “student loan delinquency” and “loan default.”
Things had to get real in order for me to pay closer attention to my student loans.
When I told my loan stories to friends, they had similar stories to tell. It made me look deeper into the student loan crisis, and get upset about it. I wanted more people to know about this national scam.
By the end of 2019, outstanding student loan debt rose by $10 billion, to a total of $1.51 trillion.
Here’s a great video by Hasan Minhaj about the student loan crisis: https://www.youtube.com/watch?v=t0CyBv18A5k.
I want to share some of my knowledge, specifically about avoiding delinquency on loans. This is in the hopes of helping someone out there who needs it!
What Is Student Loan Delinquency?
Thefirst day after you miss a student loan payment, the loan can become past due. If it is past due, it is delinquent, according to studentaid.gov. The loan will stay in delinquency status until the past due amount is paid. It sounds intimidating – but trust me, it’s not so bad! It is only a status. By the end of 2019, about 11% of all student debt was in delinquency or default status.
A student loan account is no longer delinquent when you pay off the past due amount.
However, if the loan account is delinquent for long enough, it can go into default (usually after 90 days or more). This is worth caring about. If a delinquent or default status is reported to the credit bureaus after that period, it can negatively affect your credit score.
You might be thinking, “Ok cool, I’ll just try to keep up with my regular loan payments.”
For many post-grads, the answer isn’t so simple.
Student Loans As A Consumer Product
Student loans are essentially treated as a consumer product, and therefore loan service providers (some big ones are Nelnet, Heartland ECSI, and Great Lakes student loans)tend to do the least they can to help the borrowers and authorized payers (aka you), and everything they can to increase their profit.
This can mean anything from providing horrible customer service to tossing loans around like basketballsamong servicers.
I’ve been paying off my student loans for less than three years. In that short time, two of my student loans have been transferred to different loan servicers.
When these loans were transferred, I never knew about it. No email, call, text, etc. This is a really common occurrence for many students and post-grads who are just trying to vibe and slowly repay their student loans.
If a loan is transferred and you had no inkling, the principal (the main balance) can go unpaid. Remember, this includes interest! So the main balance + interest can go unpaid, and eventually can become delinquent.
That is why it is soo great to stay on top of your student loans as much as you can. Here are a few ways to own your loans and avoid delinquency (accidental or not):
1. Know Your Loans.
Know what you’re paying for! After all, this is your money. No one is watching your student loans, but you!
The Federal Student Aid Website allows you to see all of your student loans in one place.
This website provides all kinds of helpful info about financial aid and loans.
Unfortunately, this website is part of the scam. It can be very difficult for students and post-graduates to log in, as a means of discouraging transparency of your loans and encouraging delinquency.
So, please be patient.
And, if you need to change your username and password,keep a record of this for future reference.
2.Keep your contact info updated.
If you move or change your contact information, such as your cell number or e-mail address, make sure this is updated on all of your loan service provider websites.
Once you have your logins for each website and can see your loans, I would recommend keeping a separate record of all of the loans listed on the FSA website.
3. Download the mobile app for your student loan account(s).
Just like Chase and Capital One have mobile apps, your loan service provider probably has one, too.
Download the app to make it easier to track your loans, even when you’re not near a computer.
4. Keep an eye on your student loan account balances as if they are your bank account on payday.
If your loan account balance looks higher or lower than usual, call your loan service provider. Don’t wait! Student loan service providers don’t give out “freebies.”
That $15,000 that disappeared from your loan balance overnight probably isn’t due to a “clerical error.”
Your loan can change its terms without notifying you – i.e., the interest rate, or even the provider.
5.Check your credit report for any alerts about unpaid student loan accounts.
Many credit card companies regularly generate free credit reports as a courtesy. I know Capital One has a new credit report on deck for me every week.
If you don’t have a credit card, free credit reports are available here:https://www.credit.com/signup/
It’s super easy to sign up, and you’ll be able to see if anything sticks out or needs attention on your report.
6. Automate Your Student Loan Payments.
Automating your loan payments can be helpful if you’re forgetful, or if you simply can’t be bothered to log in and make payments every month.
What if you automate the loan payment, and then don’t have enough money to pay it?
Sign up for e-mail notifications when you sign up for automatic payments. Use this to automate alerts a few days before payment. Then, if you can’t make one payment, you can cancel that one before the transfer.
Automating payments might also mean getting a reduced interest rate. For example, when I automated payments on my Nelnet student loan, I got a 0.25% interest rate reduction. It might not seem like a lot, but it’s something!
Wrap Up
Avoiding delinquency or a default status on your student loans can be tricky. Once you get to know your loans, delinquency won’t seem so intimidating. It’ll be easier to navigate repayment and the rest of the loan’s life. Don’t let these service providers shake you!Thank you so much for reading my article. Please be sure to check out the rest of my blog here!
