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Dealing with Student Loans

BY Jeni Caldwell
01/20/2014 - 2:29pm

Have you or your child recently graduated from college or an advanced degree program? If you’ve taken out any student loans along the way, it will be time to start paying them back. So where do you start? The first step is figure out how many student loans you have and who is servicing each loan. If you go to The National Student Loan Data System website at you can look up the amount of your student loans as well as where you need to send payment.

To get started you will need to supply the following information:

  • Social Security Number
  • Date of Birth
  • First 2 letters of your last name
  • Personal Identification Number (PIN) (4 digits)

The PIN is a number you set up when you first applied for your student loans. If you have forgotten your PIN, it’s okay, there is a link you can click to have it sent to you again. Once you have logged in, it will list all of your student loans. If you click on one of them it will tell you the principal balance, outstanding interest, and what lender is servicing the loan. You can then go to the lender’s website and set up your payment plan.

Each lender is different, and will offer different types of repayment plans depending on your current financial situation. Some types of repayment plans include:

  • Standard (10 years at a flat rate, minimum monthly payment of $50)
  • Graduated (10 years, payments start off lower and increase usually every 2 years)
  • Extended (up to 25 years, payments can be standard or graduated)
  • Income-Based (Maximum of 15% of discretionary income)
  • Pay-As-You-Earn (10% of your discretionary income)
  • Income-Contingent (Payments are based on your AGI, family size, and the amount of Direct Loans you have)

Not all repayment plans are allowed on each type of loan. Each lender has their own payment options so be sure to talk to a customer service representative at your respective lender to figure out what payment plans are available and which will work best for you. You may also have the option to defer your loans for up to three years if you meet certain criteria.

Your lenders should be sending you information through the mail as well. I recommend setting up automatic payment plans online, if possible. The majority of lenders will give you a discount on your interest rate, usually .25%, if you set up an automatic payment plan.

Also, up to $2,500 of the interest you pay on your student loans is deductible on your individual tax return. Keep in mind there are phase out limits on this deduction depending on your income.

As a final note, the default payment plan is the standard plan. If you are thinking about using a different plan make sure you allow yourself enough time to apply for the new plan, as well as time for your lender to process your request.