Tips to Avoid Student Loan Default Before, During and After College

Last week, the Student Loan Ranger talked about the most recent statistics on student loan default rates. The cohort default rate is published annually by the Department of Education; while few additional details are provided, this week’s blog will revisit some strategies to ensure that you don’t become part of those default statistics.
Before You Start
The most important part of the not-defaulting strategy is to choose the school that’s right for you. That’s because the majority of borrowers who default on their student loans never completed their degree or credential.
If you’re not happy or struggle at your school of choice, you’re much less likely to complete your education, and if that happens, you’re much more likely to default on your loans.
Even if the school is a perfect environmental fit, if you’re going to end up with an unaffordable debt level, you might as well be paddling backwards. Too many borrowers have made the college decision an emotional one, rather than the significant financial decision that it is. Do your homework: compare college costs, graduation rates, student income after graduation and loan repayment rates, among other factors.
While You’re at College
It’s so much easier to take out a student loan these days than it was 10 or 15 years ago, when most of the application process, including the Free Application for Federal Student Aid, was paper that had to be mailed for processing.
The downside to today’s more streamlined process is that it makes loan monies more easily accessible, and therefore, easier to let it get out of hand. A $ 10,000 or even $ 20,000 loan may sound manageable until you multiply it by the four or five years it’s going to take you to get your degree, and suddenly you’re looking at a $ 1,000 per month student loan payment.
Budget creep can be equally dangerous. A modest $ 3 per day coffee is going to cost you almost $ 5,000 over a four-year period if you include the interest that will accrue on the student loan funds you used to pay for that drink. If you decide to use your summer job money for an exotic spring break trip instead of for books and school year living expenses, that’s another couple of thousand dollars gone.
Having a budget and itemizing expenses is a good way to ensure that you keep a handle on your spending and keep the student loan borrowing to a minimum.
After You’ve Left School
A common denominator for student loan defaulters is that many of them never once connect with their loan holders – and that’s just maddening. What’s worse is that many of these same defaulters aren’t even sure what loans they have or who the holder is.
The National Student Loan Data System will not only list all of your student loans for you, but it will also give you contact information for your loan holders and each loan’s status, approximate balance and what school it was for. If you have private loans, your credit report will help you track those down.
If you’re struggling or think you might struggle down the line, contact your loan holder to learn what lower payment and other options you might be eligible for.
Many borrowers who default, especially those who do so within the first three years of payment, do so without ever making a single payment. Some explain this by claiming never to have received a bill or phone call. Not receiving a bill is not a good defense for not paying it – and that goes for most consumer debts, not just student loans.
It’s your responsibility as the borrower to keep your loan holder current on your contact information and mailing address, as well as knowing when your first payment is due.
Finally, educate yourself on the terms of the loan and what options may be available. Doing so can help you make smarter decisions as to how to pay those Student loan in an affordable and efficient manner.
Source: (https://tackk.com/tips-to-avoid-student-loan-default-before-during-and-after-college)