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other lender. It is important to maintain timely and consistent student loan payments after graduation. A solid student loan repayment history will boost your credit score and is helpful when you apply for a car or home loan. NSLDS. Student loans are sold and traded between creditors so it’s easy to lose track of them after college. Losing track of which creditor owns your student loan can result in missed or late payments. The National Student Loan Data System (NSLDS), www.nslds.ed.gov, is the U.S. Department of Education’s central database for student aid. Contact NSLDS if you lose track of your lender. They will tell you who your lender is, what kind of loan you have, how much you borrowed, and what the current balance is. Keep a file of all your student loan documents, including letters, emails, and other communications before and after college. Whenever you move or change your contact information, let your student lender know. The lender is not responsible for keeping track of you. Delinquencies. Miss a student loan payment? A student loan becomes delinquent the first day after even one missed payment . The delinquency will stay in effect until the loan is brought current . To bring a loan current, the borrower must pay all outstanding overdue payments. It’s important to do this as soon as possible because student lenders report loan delinquencies of at least 90 days to the credit bureaus . Delinquencies can have a negative impact on a credit score and can impact your ability to get a car loan, credit card, or even open a cell phone contract. However, while a delinquency is bad, a default is worse. Defaults. If a student loan goes unpaid for 270 days it will be declared in default . A default on your student loan will stay on your credit report for seven years. Moreover, like any other debt, if you don’t repay your loan it can be placed in collections , which is when the creditor hires a debt collection agency to pursue recovery of the debt. It is very damaging to your credit. The lender can garnish your wages , which means a portion of your paycheck must be diverted by your employer to pay the loan. It’s embarrassing and expensive. The lender can also seize that tax refund you were looking forward to. If you are struggling to repay your student loan after you graduate college, don’t risk your credit health! Call the lender ASAP to discuss a deferment or forbearance (see below) before you default. Deferments and Forbearances. Students who return to school for a graduate degree, or who lose their job, or face other financial hardships, can request a loan deferment or forbearance from the creditor. These temporarily suspend the obligation to pay your loan, or reduce monthly payments. Neither will impact a credit report, but when the period expires, the student must resume regular, on-time payments. Reflect on Learning: Do you understand that if you lose track of your student loan creditor, it is not an excuse for non-payment? Do you understand that student loan creditors report to credit bureaus? Do you know the difference between a delinquency and a default, and the time periods that trigger each? Can you state the criteria for obtaining a deferment or forbearance on a student loan? PRODUCT PREVIEW
THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY 123
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