5 things about federal student loans

Getting a handle on student loan payments could get easier. Find out what you should know about your loans.

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Managing student loan debt can seem like an insurmountable task, but it seems more and more manageable as you learn the basics about your student loans. Start by learning these 5 facts:

1. If you're signed up for direct debit payments

It's very easy to forget whether you have a direct debit payment. You may have changed banks or your servicer may have changed and your payment is no longer being deducted. Case in point, when Navient split from Sallie Mae:

"Be aware of the change. Otherwise when a payment pops up on their bank statement to Navient, they may think their accounts have been fraudulently accessed. Borrowers should also double check that they are still getting payments deducted from their account. While the transition is supposed to go smoothly, it doesn't mean it will. Always be diligent about confirming student loan payments are processed.

If private student loan borrowers' accounts are transferred to Navient, their direct debit payments will automatically be transferred as well."

2. When your payments are due

Whether or not you have direct debit, it's very important to learn when your payments are actually due. In the case of direct debt, you might not have the funds in your account because you forgot about your student loan payment. If you get paid every two weeks for instance, the withdrawal may happen on different days that could be closer or further away to the date you get paid. Often, you may think of rent coming out from one check and student loan payments from another. The solution if you think you won't have the funds is ask for a one time change of payment date.

3. What your payment plan requirements are

Income-related plans of all sorts may require you to submit proof of income on an annual basis. Forgetting to do so can cause your payment to multiply. Pay attention to letters requesting information from your servicer.

What proof is needed?

"previous year's tax returns or W2's or 1099's, the tax document for self-employed individuals. If income drops post filing last year's taxes, pay stubs or bank statements can be provided as evidence of the change. Talk to your servicer about proof of income change, if any, is needed."

4. Your interest rates

The most important reason to know your interest is if your deciding which debt you want to pay off first. For instance, you have older student loan debt that is consolidated at a rate under 3 percent.

Then you have new loans that have a 6 percent rate. Most of the time, you would want to pay off the 6 percent loans first. Consolidating them together could extend your repayment time period. Why? Two reasons. First, reconsolidating federal student loans often comes with an extended repayment term. Also, your interest rate is averaged in the new loan. Any extra money you send in goes towards the loan balance as a whole. You'd rather extra money pays off the loans with the highest interest rate first. However, this rule may vary if you qualify for public service loan forgiveness.

5. Who your servicers are

You can't find out interest on your student loans, if your loans are in good standing or pretty much anything else if you don't know your federal student loan servicers. Go on the National Student Loan Data System site and look up this information. Even if you think you know, it's a good idea to check this site once in a while to make sure your loans are reporting the status correctly. This goes for if your not currently making payments, too. After all, you want to make sure any allowed payment breaks such as in-school deferments are reported correctly, too.

Topics:
  • Loans and Debt Management
  • Student Loans
  • Loans and Debt Management
  • Student Loans
  • Loans and Debt Management
  • Student Loans
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This article was written by Reyna Gobel from Forbes and was licensed as an article reprint. Article copyright February 28, 2015 by Forbes.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
This reprint is supplied by Fidelity Brokerage Services LLC, Member NYSE, SIPC.
The third party provider of the reprint permission and Fidelity Investments are independent entities and not legally affiliated.
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