In the not so distant future, our 2018 college graduates will have to start making payments on student loans. The six-month grace period typically given graduates so that they can find a job and start earning income is now ended, or will be soon. Now the focus should be on avoiding mistakes associated with repayment plans. There was an article in the October 8th Wall Street Journal that outlined five of the more common lapses. First, in the glow of graduation and finding work and living space, it is easy to confuse who is owed money, how much is owed and when it should be paid. This is especially true when loans have come from several different sources. It will be helpful to make a list of all the outstanding loans and loan servicers. Create some sort of spreadsheet with basic information such as servicer name, address, phone number, and website. Also, list when the payment is due and the amount of the payment. Generally, the loan servicers will contact the borrower with payment information, but when the graduate is on the move, there may be a glitch. It is important to account for all outstanding debt, so make the effort. When the graduate leaves the family nest, it is easy to forget to update new addresses, phone numbers, emails, etc. with the loan servicer. This mistake can result in late payments, penalties and additional costs that make it that much harder to get out of debt.
There may be ways to reduce or pay down debt sooner. For example, enrolling in automated payment plans may result in interest rate incentives. Paying half the amount every two weeks results in making 13 monthly payments in a year instead of 12. Rounding up the monthly payment will help, as will applying tax refunds or bonuses to the outstanding balance. Remembering to ask for help when experiencing problems with payments is important. Delinquency can lead to default, so contact your loan servicer for possible temporary relief, like a short interest rate reduction. Finally, be aware of the ever-present scam artists. Steer clear of any company that charges an upfront fee for lowering their debt or forgiving it quickly. Be cognizant of unsolicited callers or emails claiming to be associated with the government or a loan servicer. Don’t give out information like your Federal Student Aid (FSA) ID to a third party. That should be an automatic red flag. You don’t have to pay for help lowering your monthly payments, consolidating your loans or understanding your options for loan forgiveness. Go to StudentAid.gov/repay or, if a private loan, contact the loan servicer. These services are free. As with most financial scams, if it sounds too good to be true, it probably is.
In a cheerier vein, think positive. Parts of the “Positive Pledge”: I pledge to be a positive person and positive influence on my family, friends, co-workers and community. When I am surrounded by pessimism, I will choose optimism. When I feel fear, I will choose faith. When I want to hate, I will choose love. When I meet failure, I will fall forward towards future success. I believe I’m here for a reason and my purpose is greater than my challenges. As we enter the Christmas month, I give thanks for the opportunity to share my thoughts with all of you each month and pray that each of you enjoy the holiday while remembering to include God and all his blessings in your celebrations. Best wishes for a glorious 2019.
Although this information has been gathered from sources believed to be reliable, it cannot be guaranteed. This material is intended for informational purposes only and should not be construed or acted upon as individualized tax, legal or investment advice. FSC Securities Corporation does not offer tax or legal advice. The views expressed are not necessarily the opinion of FSC Securities Corporation. Financial Solutions Group is a marketing name. Financial Solutions Group is located at 128 Versailles Blvd, Alexandria, LA 71301. We can be reached at (318) 448-3201. Securities, insurance and advisory services offered through FSC Securities Corporation, member FINRA/SIPC.