🎓Get the Best Out of Your Student Loan with Reliable Servicing🎓
Welcome to our comprehensive guide on student loan servicing. If you’re a college graduate or planning to attend college soon, you should know that paying for higher education comes with a hefty price tag. According to the latest statistics, the average student loan borrower has over $30,000 in debt. However, the right student loan servicing can make all the difference in staying on track with payments, reducing interest rates, and ultimately paying off your loans. If you’re curious about what student loan servicing is and how it could benefit you, then read on.
👉 What Is Student Loan Servicing?
When you take out a federal student loan, the Department of Education assigns a loan servicer to manage your account. Your loan servicer acts as an intermediary between you and the government, providing information on repayment options, handling payments, and answering questions regarding your loans.
Student loan servicing companies act as an extension of the Department of Education and work to streamline the loan repayment process. With a servicing company, you can make payments, request deferments or forbearances, consolidate your loans, and receive guidance on repayment plans.
📝Table: Student Loan Service Providers📝
Service Provider |
Contact Information |
|---|---|
FedLoan Servicing |
|
Nelnet |
|
Navient |
|
Great Lakes Educational Loan Services |
|
MOHELA |
👩🎓Why Is Student Loan Servicing Important?
Student loan servicing is important because loan servicers help borrowers navigate the complicated world of student loan repayment. Since student loans can span decades, it’s essential to have a knowledgeable team by your side to ensure you stay on track. Servicing companies offer a range of options, including income-driven repayment plans and deferments or forbearances, to help fit your specific needs. Additionally, a reliable servicing team can be the difference between maintaining good credit or defaulting on a loan.
👉How Does Student Loan Servicing Work?
Once you graduate, leave school, or drop below half-time enrollment, your loan servicer will begin contacting you with repayment options. You will typically have a six-month grace period before your first payment is due, and this temporarily halts student loan payments for you. Afterward, you will begin paying your loans back according to your repayment plan.
If you have multiple loans, loan consolidation is an option to simplify the repayment process. Consolidating loans puts them all under one loan servicer, and it can lead to lower interest rates, budgeting simplicity, and a faster loan payoff.
👩🎓What Are the Benefits of Student Loan Servicing?
Student loan servicing offers various benefits to borrowers. Here are some of the most significant benefits of student loan servicing:
👍Access to Affordable Repayment Plans:👍
Repayment plans like income-driven repayment (IDR) plans let you pay your loans based on your income level. An IDR plan adjusts your monthly payment amount to be no more than a specific percentage of your income, which means you will pay less overall.
👍Loan Consolidation:👍
Loan consolidation is the process of combining several loans into one loan. It allows you to simplify your monthly payments, and you might even qualify for a lower interest rate.
👍Forbearances and Deferments:👍
Forbearances and deferments allow you to postpone or reduce your loan payments for specific periods, and it can alleviate the financial burden during times of hardship.
👉Frequently Asked Questions (FAQs)👈
💳What Is the Difference Between Forbearance and Deferment?
Forbearance lets you pause your student loan payments or reduce them temporarily. With a deferment, your loan principal and interest payments may be postponed, and the federal government might even pay interest on your loans temporarily.
💳Does Student Loan Servicing Affect Credit Scores?
Yes. On-time student loan payment is one of the most critical factors that determine your credit score. Additionally, defaulting on a student loan negatively affects your credit score, making it harder to rent apartments, buy cars, and receive credit in the future.
💳Can You Change Your Loan Servicer?
No. The Department of Education assigns your loan servicer to you. However, you can change your loan servicer by consolidating your loans into one loan with your preferred servicer.
👩🎓Conclusion
Dealing with student loan repayment can be overwhelming, but the right student loan servicing can alleviate the burden. By understanding what student loan servicing is, its benefits, and how it works, you can approach your student loans with confidence. Contact your loan servicer to get started and make the most out of your education investment.
👉Disclaimer
This article is for general informational purposes only and does not constitute legal advice. We recommend consulting with a licensed attorney or financial advisor for specific legal or financial advice.