Staying on top of student loans and avoiding default requires constant contact with student loan servicers. Loan servicers are the organizations tasked with collecting and keeping track of student loan debts. These organizations can also help borrowers pick repayment plans, customize payments, set up automatic billing and process requests for deferments or forbearance. To help understand how servicers can help borrowers, we will provide more details.
- Student loan servicers are the first point of contact for borrowers. They are the gatekeepers for modifying personal student loans. Before former students and graduates can set up repayment options, such as income-based repayment plans, they have to go through student loan servicers.
- Automatic bill pay can be extremely useful by making it more likely payments will be received on time every month. Most student loan servicers have this as an option. Some servicers can also send reminders to the mobile phones of borrowers before any bills come due. Debtors should check every few weeks to ensure their servicer has not changed. If student loans have been sold to another servicer, monthly payments may not be received on time.
- If for any reason borrowers face layoffs, job loss or other financial emergencies, student loan servicers can help find options to postpone or reduce payments. When borrowers are going through difficult financial situations and fail to contact their servicers, defaulting is much more likely.
Be Diligent with Student Loan Servicers
Not all student loan servicers are bad, but avoiding default and late fees requires debtors to be very diligent. Our blog last week covered issues with student loan servicers taking advantage of borrowers by failing to inform them of helpful repayment plans and inflating balances on loans. Staying in constant contact with servicers may help avoid these issues.
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