If you’re like the average millennial borrower, you’re juggling more than four student loans after graduation, according to Experian. With so many loans to pay back, you might unknowingly miss a payment on one of them.
Even if it’s a complete accident, missing a payment could put your loan into delinquency or even default. To make sure you’re up to date, avoid these five mistakes that could cause a missed payment on your loans:
- Not knowing when your grace period ends
- Forgetting to set up autopay
- Not providing your lender with updated contact information
- Missing communications from your lender
- Pausing payments too soon after refinancing
When you take out student loans before your freshman year, you typically don’t have to start paying them back until your grace period ends. Most grace periods last all four years of college and for six months after you graduate (or drop below half-time enrollment).
Student loan lender Earnest even offers a grace period that extends nine months after you graduate. Note that you can choose to make early payments while you’re in school, which can be an effective way to cut down on interest.
But if you’re waiting 4 ½ years to pay back your loans, it’s easy to forget you ever have to start paying them back. But that first payment will be due eventually, and you need to be prepared when it does.
So before you graduate, write down the details for all your loans, lenders and online accounts. If you borrowed federal student loans, complete student loan exit counseling with Federal Student Aid.
And if you have any confusion about when your first payment is due, reach out to your loan servicer for this information. That way, you won’t be caught unaware when the first bill arrives.
Making manual student loan payments can be a huge hassle, especially if you’re tracking multiple student loans, lenders and due dates. If you’re logging in to your accounts every month to make a payment, it’s all too easy to forget one.
To make repayment easier, set up autopay on your accounts. With autopay, the loan servicer can automatically deduct a payment from your bank account every month. You can “set it, and forget it,” and you won’t have to worry, you’ll never miss a student loan payment.
Of course, setting up autopay might be difficult if you don’t have enough in your bank account to cover payments. You wouldn’t want to rack up overdraft fees.
But if you can afford it, setting up autopay is an easy way to ensure you’re making student loan payments. Plus, many lenders, such as SoFi and College Ave Student Loans, offer a 0.25 percentage point discount on your interest rate for using autopay.
If your lender doesn’t have your updated contact information, you could miss important notifications about your student loans. When you sign into your accounts, make sure to provide your most up-to-date email and mailing address.
You might need to switch from your college email to your personal email after graduating. Plus, you’ll likely move away from campus, so you’ll need to share your new address.
It could also be helpful to set up mail forwarding from your old address to your new one. That way, you won’t miss important mail accidentally sent to your former residence.
Even if you’ve provided your updated email to your loan servicers, it’s possible to miss important communications. Maybe a message gets lost in your inbox or goes to your spam folder.
To avoid these messages going to spam, consider adding your servicers’ emails to your contacts. And keep an eye out for any messages from banks or lenders.
Sometimes, a lender will sell your loan to a new servicer, meaning you have to set up an account with an entirely new company. If you miss this news, you could accidentally miss months of payments on your loans.
Finally, you should never stop making payments on your student loans until you’re 100% sure you don’t have payments due. This scenario especially comes into play when you refinance student loans.
When you refinance, you essentially give one or more of your old loans to a new lender, who then issues you a new loan in their place, hopefully with better terms and a lower interest rate.
This process can take a few weeks, though, so even if you’ve been approved, don’t stop making payments on your old loans until your refinanced loan is up and running. Make sure to get the green light from your new lender before stopping payments on your old accounts.
The same advice applies if you put your loans into deferment or forbearance. Make sure your loan servicer has truly paused your payments before you stop paying your bills.
Avoid these mistakes so you’ll never miss a student loan payment
Missing payments on your student loans can result in bad consequences. First, you could rack up late fees on your unpaid debt. Your loans could go into delinquency or default, and you could get a red mark on your credit report that drags down your score for years to come.
Avoid this stressful situation by tracking your student loans and staying in contact with your loan servicer. And if you’re worried you can’t afford payments, find out if you can adjust your loan payments through income-driven repayment or refinancing.
That way, you can restructure your loans in a way that works for your budget — and avoid missing payments on your debt.