January 23, 2013 by Victoria
Tuesday morning when I had an incoming call from an unnamed out of state number; I answered with all cheer and confidence. You see, at the close of 2012 I had paid off all other debts, and just knew my student loan was safely tucked away in deferment until the end of grad school.
Boy was I surprised to hear that it actually was my student loan, and the rep had the nerve to tell me I was past due.
I had just called in to check on my loan a few WEEKS earlier. I was assured that my loan was covered by in school deferment and I no longer had to make any payments- and I was totally banking on this.
While this was the case I learned was that there is a maximum amount of months for in school deferment (duh), and my bill was due last week. These are the phone calls that really change a game plan.
I remained eerily calm as I explained to the rep that I have no intention of any derogatory marks, and I really need to know my options. Before I continue, let’s go over some vocabulary:
In school Deferment – you have the option to defer your loan while you are a full time matriculated student. This is for approx. 66 months. (5 years plus a 6 month grace period)
Forbearance – you can request forbearance for a student loan in 3 month increments, this is if some situation arises and you cannot pay. There is a MAX for forbearance (in my case 12 months) you can request forbearance consecutively, but you must reapply. This will give you at least 3 months to get yourself together.
Please contact your loan granter; what applied in my situation may be different for you.
There are many payment options for your loan. Graduated repayments, income based payments or the standard monthly payment. Whatever you chose, it is important that you understand that you are probably only paying the interest.
Interest- the extra that you are paying me to say “thank you” for loaning me this money
Principle- the amount that you actually borrowed
Please do the math! find out your loan pay off amount, interest amount and how long you will have to make monthly payments to make a dent in your principle. The results may shock you.
My game plan is to use this three month forbearance period to save and make a substantial payment towards the principle. Please understand that payments towards the principle must be specifically called in, or else you will only be credited towards paying the interest. (Lenders are slick)
Look out for the next article, which will cover loan forgiveness options for teachers and humble public service workers like Rap and me. – ❤ V