This is the first article in our series covering student loans. Our goal in this series is to equip you with the knowledge necessary to make efficient and informed decisions regarding your student loans. In this post, we will explore student loans and your situation.
Student loans have become a big deal! 37 million Americans collectively owe over 1 TRILLION dollars in student loans – and yet nobody seems to fully understand them.
Every year new repayment plans and forgiveness options pop up and further complicate the already complex government loan programs. And then private student loans are like the wild wild west of lending… there’s no telling what you’re going to get.
There is a ton of material to comb through when it comes to figuring out your student loans, and it’s best broken down into bite-sized pieces. Today we will cover the first step: clarifying where you stand. This step is critical for making solid decisions.
In our future posts, we will get more into the details and explore specific topics, such as what you need to know about refinancing, Public Service Loan Forgiveness – “PSLF”, and income based repayment (IBR) options.
Where Do You Stand?
Clarifying where you stand can be broken down into three components…
1) Student Loan Details
2) Financial Circumstances
3) Professional Circumstances
Student Loan Details
Do some homework and identify exactly where you stand with ALL of your student loans. Don’t skip over details or you may miss an important factor!
Verify Federal Loans
– log into the Federal Student Loan Database and click the “Financial Aid Review” button. Log in using your information (click the forgot user name or password if applicable) or create a new account if you’ve not been here before. This will give you access to the necessary federal loan information.
Verify Private Loans
– Pull your credit report to verify private loans. Log into your respective loan servicing website and pull as much information as you can. Locate your promissory note (detailed document about the loan you received when you took it out) to verify information.
It’s a good idea to create a spreadsheet to keep inventory of all this information. The specific information you are looking for is as follows:
1) Type: Identify all of your loans and organize by the type of loan. For instance, if your loan shows up in the Federal loan database, they are Federal. If the lender is the US Dept of Education, it’s a Direct Loan. If certain loans don’t show up here, they are private loans. Private loans will show up on your credit report. Make sure to include a full description of the type of loan (Example – Direct Perkins Subsidized Loan).
2) Status: Provide information about your current repayment status. (Examples – deferment, forbearance, grace, repayment, delinquent, default, etc).
3) Current Balance: What do you owe now?
4) Balance Upon Entering Repayment: What was the original balance?
5) Disbursement Date: When was the loan taken out?
6) Current Interest Rate: Make sure to include the rate and note if it’s variable or fixed. If variable, include information about how the rate is set and the maximum rate limits.
7) Current Monthly Payment: What are you currently paying each month? (Broken down by individual loan)
8) Servicer: (and/or collector) Who is servicing your loan?
9) Lender: Who is the lender? (Sometimes this is the same as the servicer)
Financial Circumstances
It’s essential to clarify exactly where you stand financially to make good decisions with your loans. Here are some questions to ask yourself:
- Do you have an appropriate emergency fund in place?
- Do you have credit card debts or other consumer debts?
- Do you have appropriate insurances in place (disability, life, health, etc)?
- Do you have an updated listing of all your assets and liabilities (debts)?
- What does your income look like each month? How about your expenses? Do you have money left over each month?
- How much are you contributing to various retirement plans? Are you contributing to an HSA?
- What is your plan for the student loans?
- Do you expect any big financial changes in the next few years that could change your general financial situation?
Professional Circumstances
Same thing professionally… it is important to work through these questions and have answers before you make big student loan decisions.
- Will you work for a not-for-profit, government, or other PSLF qualified employer?
- Is your medical residency and/or fellowship employer a PSLF qualified employer?
- Is your current or future employer providing loan repayment assistance?
- Are you unemployed, disabled or a veteran?
- Did you withdraw from school prior to completion?
- How will your income change in the future?
- What is your spouse’s income and how will it change in the future?
By gathering all of this information and answering these questions, you will be well positioned to make educated decisions regarding your student loans.
Next week, we will begin to dig into the mechanics of student loans. Particularly, we will be looking at how student loan interest works… it’s not as simple as most people think.
Check out our other posts in the series below:
Don’t forget to check out our other posts in the series below:
Part 1: Student Loans & Your Situation
Part 2: Student Loan Interest
Part 3: Student Loan Consolidation
Part 4: Student Loan Repayment Plans
Part 5: Student Loan Forgiveness
Part 6: Qualifying for Public Service Loan Forgiveness
Part 7: Student Loan Refinance
Part 8: Student Loan Refinance Reviews
Part 9: Student Loan Tax Considerations
Part 10: Student Loan Resources