Best Way to Pay off My Student Loan

Let’s turn our attention to an area that has become an epidemic – student loans and the inability of young individuals to ever repay them. The latest figures as of time of publication have student loans at over $1.4 trillion dollars and climbing. Many of these borrowers will fall behind on payments and eventually default entirely. 

1. Extended Repayment Plan

With an extended repayment plan, the magic is that the federal government will kindly allow you to simply expand the amount of monthly payments you will make in the lifetime of your loan. This can be for as long as 25 years. All that it takes to accomplish is to contact your lender and tell them that you want to extend your repayment plan.

By taking it out from the standard 10 to 25 years, you will massively reduce your payments on a $38,000 loan amount. Instead of paying back a crippling $381 per month, you will now repay at a rate of $196 per month, a dramatic monthly savings of $185 per month, or nearly half.

2. Graduated Repayment Plan

With an extended repayment plan, the magic is that the federal government will kindly allow you to simply expand the amount of monthly payments you will make in the lifetime of your loan. This can be for as long as 25 years. All that it takes to accomplish is to contact your lender and tell them that you want to extend your repayment plan.

You could also do this on a shorter time frame using the original 10 year repayment plan, with initial payments amounting to $213 per month and rising to $638 per month in year nine.

All that you have to do to get onto this advantageous repayment plan is to contact your lender and request it. 

3. Income Based Repayment

There is also a little known and highly useful third option called Income Based Repayment. In this generally self explanatory option, your payments will be calculated using your underlying income. The formula factors in your income amount, the poverty line in your state, and then sets your repayment amount at 15 percent of your remaining income (or 10 percent for new borrowers). 

Another fantastic appeal of this Income Based Repayment is that you can get student loan forgiveness on any remaining debt from this loan after either 20 or 25 years, depending on the date in which your loans originated. This is sometimes referred to as the Secret Student Loan Forgiveness Program. 

Consider that if you obtained your original student loans before the date of July 1, 2014, then your payment could amount to as little as $77 per month. For those who got their loans after July 1, 2014, the student loan repayment amount could drop to as little as only $52 per month.

How to Find a Reputable Credit Counselling Service

One that will not harm your credit score!

If you find that you have started living from one pay check to the next, or have become worried about keeping to a budget, then you should start seeking out a good credit counsellor before you fall behind on your credit card bills and loan payments. 

Credit counselling organizations of high repute are able to successfully advise you in managing your debts and your cash flow, assist you in creating a workable budget which you can actually stick to, and provide you with no cost workshops and other educational materials.  

Request an Upfront Counselling Meeting

Their staff will be filled by highly trained and certified credit counsellors who are well versed in debt and money management, consumer credit issues, and budgeting matters. You can expect them to thoroughly review and talk over your whole financial situation with you as they help you create a specific plan to attack your money problems head on. These upfront counselling meetings commonly take an hour. They will always offer you follow up sessions to continue the discussions and review the working progress of your particular plan. 

Get Free Information About Them First

You will know a reputable credit counselling organization by the way that they offer you completely free information on themselves and their services without asking for you to give them any personal details or information on your scenario. Firms that will not do this are waving red flags. Look elsewhere for your help. 

A number of military bases, universities, housing authorities, credit unions, and U.S. Cooperative Extensive Service branches will run not for profit credit counselling programs. Your bank or local consumer protection agency can also help to refer good outfits. After you obtain a list of counselling organizations that you can work with, you should run each name by your local consumer protection agency (like the BBB) and your state’s Attorney General office. 

They will know if other consumers have raised complaints about them. 

Check With the U.S. Trustee Program

Remember that just because no complaints have been filed does not guarantee their legitimacy. Fortunately, the U.S. Trustee Program maintains a list of reputable credit counselling organizations that are fully approved to deliver pre-bankruptcy counselling. You can rely on all of these organizations to be honest as they have been both thoroughly vetted and have proven themselves time and again.

Once you have completed your background due diligence, you should interview your final short list of candidates. The majority of reputable credit counselling organizations are actually not for profit outfits. This helps them to provide their service in person via local offices. Otherwise they can give you these services either over the phone or even online. 

Be forewarned that not for profit status does not mean that all services will be affordable, free, or even legitimate. Some credit counselling outfits assess considerable fees. They might hide these. Others will ask (and even pressure) their customers to give so-called “voluntary” contributions. These can lead to still higher debt.

How to Use Credit Counselling and Credit Protection Services

There may be times when you need to avail yourself of credit counselling services to help protect your credit. This is nothing to be ashamed of, it only means that you have gotten in over your head with your revolving carried debt. Attacking the problem head on is the best way to solve it.

Remember that getting involved with credit counselling will not negatively impact your credit scores directly in any way. 

What a solid credit counselling organization will first do is to offer you help with financial management and budgeting education. This will enable you to better regain control of your personal credit and debt so that you can get it in hand for the future. 

The fact that you have availed yourself of such classes does not show up on your credit report in any way. 

They may also offer you a service to help you repay your debt more efficiently called debt management plans. Repaying your debt this way will cause a note to be made on affected accounts, yet this does not affect your credit scores in any meaningful way.

Debt management plans have the credit counselling agency negotiating deals for lower interest rates or even lower payments directly with your creditors and lenders. 

This will cause a comment or note to be added on your accounts that they are being paid back via a credit counselling program or even a debt management plan. Lenders who are carefully reviewing your credit report would see this information if they are looking closely. 

These notations do not affect your credit score in any way whatsoever.

7 Tips for Protecting Your Credit And Keeping Your Score

Protecting your credit is a lifelong proactive task. Here are the seven steps that you should follow to help ensure that you do not suffer a loss of credit score points along the journey.

1. Keep Divorce From Destroying Your Credit 

Divorce is unfortunately a reality for more than half of marriages in America today. There is no reason for this destruction of your marriage to also destroy your credit. Make certain that you personally make all monthly minimum payments and mortgage or car payments on any accounts which are in both of your names. 

Never assume that you spouse will do this on his or her own, or even that they will live up to a verbal commitment or even a judge-imposed court order to do so. If one of you fails to make any payments, then both of your credit reports and scores will suffer the same fate.

2. Open an Emergency Bank Account 

This should be the account that you only use when you have a bona fide emergency. This might include a car accident, devastating illness, loss of job or income, or other real emergency. Many have overlooked or entirely neglected this critical step to have money available to continue paying their bills when disaster inevitably strikes (which is usually when you least expect it or are prepared for it too).

3. Always Check Your Monthly Statements 

One of the quickest ways to spot identity theft is through taking the time to review your monthly statements. You may be busy and this is a hassle to do, but it is the surest ways to catch fraudulent activity on your credit card or bank accounts. If you see any suspicious activity that you did not authorize, then be sure to contact the appropriate merchant, bank, or creditor right away to mitigate the damage. 

The creditors are responsible for reimbursing you for fraudulent activity, and banks too, but only if you report it in a timely fashion.

4. Do Not Put Confidential Information on Social Networking Sites Ever

You can not trust the social networking sites. Anyone at all (and not just friends) can access this personal information and use it to steal your identity. Many frauds have begun because of these social networking sites and people choosing to reveal intimate information that they simply should not. Stay safe by being smart, and keep all personal information confidential online.

5. Never Use Your Credit or Bank Debit Cards on an Unsecured Website 

It is easy to check out the security of a website. Most browsers will tell you the status if you mouse your cursor over the address bar at the top of your screen. Unsecured websites are fraud and identity theft just waiting to happen. This is an easy problem that you can avoid with only a few seconds of caution online.

6. Create a New Credit File 

Unfortunately, it is illegal for you to personally create a new credit file for yourself. The good news is that if you possess poor personal credit, you can start up a business and develop a separate business credit file which has no correlation to your personal credit file. All that is required is that you form a business, select a corporate structure, abide by the appropriate IRS requirements, and then finally establish a business line of credit.

By keeping a healthy and timely credit profile for the business, you will be able to establish lines of credit and borrow money using the business credit file. 

7. Keep Credit Cards and Contact Numbers Secure

Keep all of your credit card numbers and contact numbers in a secure place, separate from where you keep your credit cards themselves – you should have an action plan in the event that your wallet is physically stolen. This starts with having the associated account numbers and customer service contact phone numbers on all of your credit card accounts that you keep in your wallet somewhere separate and secure. 

Should you be robbed, get on the phone and start cancelling these credit cards immediately. While you are on the phone with your creditors, you can request replacement cards and new pin numbers from them. If you do this in the immediate hours after you are robbed, then you will likely avoid having to deal with the hassle of fraudulent credit card charges later.

10 Action Steps to Handle Identity Theft Effectively

If you become a victim of identity theft, you will unfortunately be in nearly the majority with consumers in the United States today. In the last five years, around 48 percent of Americans have had their identities stolen, creating huge amounts of trouble and chaos in their lives. 

Here are the ten steps which you should follow immediately to effectively handle becoming a victim of identity theft.

  1. Immediately contact all impacted credit card banks and creditors 
  2. Set a fraud alert on your three credit reports
  3. Pull your credit reports and check them for fraud – you should sign up for a free credit report service like Credit Karma or Discover It to allow you to check these as often as you feel necessary, at least on a monthly basis for a while. This will not impact your credit score by creating soft inquiries only on your credit reports
  4. Freeze Your Credit – you only have to contact one of the three credit reporting bureaus to have this done across the board
  5. Report your identity theft and circumstances to the FTC – this is the federal government agency that handles investigation of identity theft in America today
  6. File a police report – you may need this if you have to repair your credit reports as a result of the identity theft
  7. Remove fraudulent information from your credit reports – Once you have checked over your credit reports, you may need to contact the big three credit bureaus to get any fraudulent information or accounts taken off of your profile. Thankfully the FTC has created a sample letter template that you can utilize in drafting your letter. Be sure to include copies of your police report and identification information with the fraudulent information detailed. 
  8. Be sure to change out all of your affected passwords
  9. Replace your stolen Social Security Number if this was impacted
  10. Contact your utility and phone companies and make them aware of the identity theft as well.