Financial expert explains why credit should remain a top priority for student loan borrowers
EL PASO, TX (KVIA) -- After a 3-year pause, nearly 30 million Americans will need to resume student loan payments. This financial challenge comes at a time when national credit debt has reached a record of $1 trillion.
To navigate repayment, here are some essential tips:
- Identify Your Loan Servicer: Visit StudentAid.gov to determine your loan servicer, as many providers have changed over the past three years.
- Determine Your Due Date: Payments resumed on October 1, but your due date might fall anytime this month.
- Temporary Grace Period: Until September 30, 2024, missed payments won't be reported. However, note that interest, previously frozen, is now accumulating.
Student loan payments greatly affect your credit score. Monique White, a financial expert and head of community at Self Financial, advises people to have a healthy financial foundation.
White gives tips to help maintain a good credit score while paying off student loans:
- Check Your Credit Report: Understand your servicer and provider for on-time payments.
- Review Your Budget: Plan for the added expense of loan payments.
- Demonstrate Reliability on Payment: On-time payments contribute 35% to your credit score.
- Impact of a Low Credit Score: A low score can affect everyday expenses, including utilities and rental deposits.
- Making Extra Payments: Consider extra payments to save on interest and reduce the loan term.
- Understanding Interest: Seek help from your student loan servicer to understand how interest varies based on your loan type.
The Biden administration just approved additional debt relief totaling $9 billion for 125,000 student loan borrowers. The President is expected to provide further updates on efforts to cancel student debt later today.
