Education loans

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Education loans
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Follow 4 Tips to Stay on Top of an Income-Driven
Repayment Plan
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• A few weeks ago, the Department of
  Education announced that as of midsummer, nearly
  3.9 million federal student loan borrowers had an
  income-driven repayment plan  a 56 percent
  increase from the same time last year. 
• This was great news, as it indicates that not
  only are more consumers aware that such lower
  payment options exist, but they are also using
  them to ensure their payments are manageable. The
  same announcement showed a 2 percentage point
  drop in the proportion of federal student loan
  accounts that were past due during that same
  period. Coincidence? We don't think so.
• So now that we've got borrowers utilizing these
  programs, we can stop worrying about them, right?
  Wrong. According to data published by the
  Department of Education last year, almost 60
  percent of student loan borrowers who have chosen
  an income-driven repayment plan fail to submit
  their annual renewal applications on time. This
  is an especially alarming number if you consider
  the consequences of submitting late.

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A borrower who pays under one of the
income-driven repayment plans such as
income-based repayment, income-contingent
repayment or Pay As You Earn is required to renew
that plan annually. While these plans are all
slightly different, in general, failure to renew
your plan on time can result in some or all of
the following consequences Your monthly
payment may convert to a ten-year standard
repayment plan, which can be a very significant
jump from your income-driven repayment
payment. Any outstanding accrued interest can
be added to your principal balance. If
applicable, there could be a ceasing of the
interest subsidy allowed on some loans during the
first three years under the income-driven
repayment plan. With such expensive
consequences, why do so many borrowers fail to
renew their income-driven repayment on time?
After talking to affected consumers and
participating loan holders, the Student Loan
Ranger has come up with a checklist to ensure
that you don't become part of this statistic.
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Know whom you owe

• This might seem like an unnecessary reminder, but
  the Student Loan Ranger gets questions almost
  daily from folks who don't know who holds their
  student loans. If you're one of them, you can
  find a list of loans, loan holders and their
  contact information by logging into the National
  Student Loan Data System.

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Open your mail  all of it

• The number one reason that borrowers fail to
  renew their income-driven repayment plan on time
  is because they don't see the reminder notices
  and instructions. According to the consumers
  we've talked to, this is consistently because
  they don't open their mail.
• Many borrowers pay their student loans via
  automatic payments through their bank or have a?
  payment of zero under their income-driven
  repayment plan yes, that's possible. So when
  they receive emails or snail mail from their loan
  holders, they assume it's a bill and toss it into
  the physical or virtual trash bin.
• Expect to start receiving reminders for the
  renewal between two and three months before the
  end of your current 12-month income-driven
  repayment period, with the renewal documents due
  up to a month before the end of that period. It's
  very important to make this deadline as, in most
  cases, if the loan servicer doesn't receive the
  documents on time, all of the consequences we
  mentioned previously will kick in. It might be a
  good idea to set your own reminder on your cell
  phone or other device.

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Keep track of your financial situation

• Many consumers using the income-driven repayment
  plans don't realize that they actually don't have
  to wait for the 12-month period to expire if
  their financial situation changes.
• If your income increases or decreases, you can
  contact the loan servicer at any time to submit
  updated financial information, have your payment
  adjusted accordingly.
• On a related note, remember that if something
  causes you to not be able to afford your payments
  at all, it's important to contact the loan
  servicer right away. Especially with federal
  loans, there's almost always something your loan
  holder can do to provide relief and help you
  avoid late fees and credit hits.

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Again, remember to open your mail

• Seriously remember that statistic we listed
  earlier almost 60 percent of borrowers don't
  renew their income-driven repayment plan on time,
  and that's mostly due to failure to open their
  mail and see the reminders. What that number
  doesn't show is that we see that many of those
  borrowers who fail to renew on time fall past due
  on these loans.
• Remembering to renew your income-driven repayment
  plan can be a challenge, which is why
  organizations like ours ?and federal Education
  loans servicers are being much more proactive
  about reminding borrowers when it's time to
  renew.
• Still, it's always best to take initiative on
  your own. Know your loan servicer and how to
  reach them, understand your payment plan and
  reach out if you get in trouble
• Source http//www.usnews.com/education/blogs/stu
  dent-loan-ranger/2015/09/23/follow-4-tips-to-stay-
  on-top-of-an-income-driven-repayment-plan

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