Tips For Dealing With Student Loans
By Curtis Henderson
Student loans are tricky, generally because they are issued to young consumers who are not yet very well versed in the areas of consumer credit or even personal finance. There are a lot of foreign words thrown around, like “deferment” or “forbearance”. These are things that even if a young consumer is somewhat familiar with how to handle a credit card, had probably not heard of or had much experience with.
What is also important to understand about student loans is that they are generally issued on a dispersement by dispersement basis, or a semester by semester basis. What that means is that if your entire undergraduate education is going to cost $100,000, you will not have one loan for $100,000, you will actually end up having eight different individual loans totaling $100,000. When a student has gone on to even more advanced levels of higher education, beyond their undergraduate degree, they may actually enter into the workforce with many different loans to stay on top of. This can be somewhat overwhelming for someone fresh out of college. Any of us that have experience with creditors know that they sometimes misappropriate payments or sometimes the check gets lost in the mail. It can be a nightmare if you have to address and manage so many different accounts that are essentially for the same debt. What can make that process even more confusing is that those eight different loans may all have an account number that looks very much like your social security number, with maybe only a few digits on the end to differentiate them. So good luck if you have to get into a conversation over the phone about which loan is which.
The best thing for a consumer to do is re-finance all of their student loans into one loan. This will not only make it much easier for them to keep track of, but it can also lower their interest rate in a lot of cases. It is much easier to manage one account than it is to manage eight or 10.
While student loans can have all of these different nuances that a student or young consumer must be aware of, they also do have things that can help, like a forbearance, which I mentioned earlier. A student that comes right out of school and looks to enter the workforce may not always be able to find a job right away, in which case they may be faced with potentially missing payments on their loan. By applying for a forbearance, you can actually get a grace period in which you do not have to make payments. Usually the interest rate will keep accruing while you are not making payments, so the best idea is to use this option wisely.
So, while student loans can be somewhat tricky for a young consumer to manage or understand, they do also have some solutions in place for difficult times. As most of us know, this is not the case with most other loan products available to us. The main thing that must be done with a student loan is to make sure to file the appropriate paperwork on schedule, for things like deferment or forbearance and try to re-finance them into one loan once your schooling is complete. #
Curtis Henderson is President/CEO of Qwest Credit Enhancment in Wilmington DE, www.qwestcredit.com. He is an FCRA Expert, FICO Pro, and Nationally Recognized Credit Scoring and Credit Reporting Expert
