by Repayable | Feb 20, 2017 | Getting started, Money Matters
Read this article if you’ve borrowed money to attend college and aren’t sure what type of loans you have. Estimated read time ~3 minutes.
You need to know the type of student loans you have in order to choose the right repayment option and make the most of your money.
So how do you know what type of student loans you have? First off there are two types of student loans “federal” and “private”. Federal loans are funded by the U.S. government and come with a standard set of borrower benefits and fixed interest rates. Private loans are made by banks and other private lending institutions and often don’t carry the same benefits as federal loans. Determining which type of loans you have is easy if you follow the directions below.
Ask your loan servicer(s).
If you have more than one loan servicer that’s a good sign that you have at least one loan is with a private lender. When you borrow federal loans they will be serviced by the same company. Your loan servicer(s) will let you know if you have federal or private loans with them. Just give them a call or send them an email.
Go to the National Student Loan Data Services (NSLDS) website.
This step require a little effort on your part because you will need an FSA ID (you can set this up when you go to the website). Once you’ve gotten that though it’s very easy to track your loan information. Your federal loans will be listed there.
Call the Federal Student Aid Information Center (1-800-433-3243).
The FSA information center employs counselors who can help you find out the type of loan you have when you call.
Check out the name of your loan.
Here’s the list of federal loans: Stafford, PLUS, Perkins, FFEL, William D. Ford Driect Loan Program (aka Direct Loans).
Other things that hint at the source of your loan.
If you needed a credit check or a cosigner that’s a strong sign it’s a private loan. If your repayment period begins while you’re still enrolled in adequate credit hours, it’s a private loan.
So what kind of loans do you have?
I’m curious to know what type of loans you have? Do you have federal, private, or a mix of each? My loans are completely private now that I’ve refinanced but prior to that were all federal. Comment below or head over to the Repayable Facebook Page and let me know what type of loans you have!
Additional Resources:
https://studentaid.ed.gov/sa/types/loans
https://studentaid.ed.gov/sa/types/loans/federal-vs-private
http://www.studentloanborrowerassistance.org/start-here/what-type-of-loan-do-i-have/
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by Repayable | Feb 6, 2017 | Money Matters, Refinancing
Refinancing student loans is a great way to make your money work for you by paying less interest. A lower interest rate means more of your payment goes to principal. This strategy gets you out of debt faster with no additional financial sacrifice on your part. So what’s the catch? It seems like it’s too good to be true, but it’s not, as long as you do your homework.
Remember, student loan debt is a 1.4 trillion dollar market. The companies that offer refinancing have a lot of money to make, even at interest rates lower than your federal rates. Refinancing companies also cherry-pick the best borrowers so they can take the least risk and earn the most money. The business model makes sense and fits the market.
Of the multitude of companies vying for your debt, how do you bring the best to the top? I propose emailing each refinancing company’s customer service department and asking the following questions.
How does your company protect my financial information and identity?
This question is there for your own peace of mind. You provide a lot of sensitive personal identity and financial information to these companies so you want to make sure they are diligent about keeping that information protected.
Are there any application fees or fees for early repayment?
Don’t pay these fees, ever. If a refinancing company has either of these, cross them off your list of options.
What borrower benefits does your company offer?
This is the goldmine of information. Many companies will have this information somewhere on their website but it’s helpful to get a succinct list. These benefits can be the tie breaker for companies offering similar refinancing rates.
After I refinance my student loans with you, will your company sell my loan to another company?
This question is important because you want your loan to stay with the same servicer so you get the same benefits you vetted them for in the first place.
What happens to my loan if I die?
Federal student loans are discharged (aka forgiven) if you die. However, that isn’t always the case with private lenders or refinancing companies. If you have a co-signer it’s likely they will have to repay your debt and perhaps the total bill all at once. This answer determines a lot of your financial planning. Essentially, if your debt will not be discharged upon your death you need a term life insurance policy to cover the balance.
An important note, if you or someone you know is in a crisis, whether or not you are thinking about killing yourself, please call the National Suicide Prevention Lifeline at 1-800-273-TALK (8255).
How are extra payments allocated?
You want to know if your extra payments are allocated to principal only or if they’re allocated to principal and interest. This isn’t so much a deal breaker as it is information you need during repayment. Some companies will have continuously accruing interest and your extra payments will first be applied to the interest that has accrued since your last payment.
What happens if I need to adjust my monthly payments?
This question gives you a sense of the companies flexibility with monthly payments. It’s important to know the steps you need to take in order to adjust payments in case that scenario arises. Many companies offer the ability to change your monthly payments if you need to. If you anticipate inconsistent monthly income this is a crucial question.
If market interest rates improve, can I re-refinance through your company for a better rate?
If the market interest rates improve dramatically it’s nice to have the option to lower your rate to match. On the flip side, if you choose a variable interest rate it’s nice to know if you can change to a fixed rate if the market interest rate starts to jump up. Follow-up questions to go with this include: “What are the requirements for re-refinancing and how do I do that?” and “Is there a fee for re-refinancing?”
The answers to these questions can help you confidently choose the best student loan refinancing company for your needs. For more reading on refinancing check out Refinancing as a Resident, Four Refinancing Disasters to Avoid, Three Surprises When I Refinanced, and A Millennial’s Guide to Earnest.
What’s keeping you from refinancing your student loans? Let me know in the comments below or on the Repayable Facebook Page.
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