If you’re frustrated and confused by your student loans, you’re not alone. We may not be able to help you pay back a mountain of loans, but we can help you make sure you stay on top of it.
According to the most recent data available, the average student loan debt for newly graduated veterinarians in 2014 was over $150,000, with close to 20% of loans exceeding $200,000. Ouch. And that’s on top of the debt that many veterinarians accrued while in undergraduate school. Talk about frustration!
Here’s how to be defensive when it comes to paying off your student loans. Although it may take a number of years to repay that mountain of debt, following these tips will help you do so with as few hiccups as possible.
Know Your Loans
How much do you owe? To whom do you owe it? If you can’t answer these two very important questions, you’re letting your lender take advantage of you. These questions may be confusing because the servicer of the loan is often not the original lender.
There are two types of student loans—federal and private—and each has its own quirks. For federal loans from the Department of Education, you need to set up an online account through the Student Loan Data System to figure out how much you owe in loans and to whom you owe it.
For private loans through a bank or other entity, you’ll need to figure out the institution’s system of reporting loans. If you can’t figure out where your loan information is, you can always check your credit report at annualcreditreport.com because lenders almost always report loans to the bureaus.
Payment plans are usually the way to go when paying off loans, but some grads don’t know these programs even exist. With federal loans, you may be eligible for a payment plan that allows you to submit your income and family size to reduce or even eliminate your monthly payments. The big lenders don’t want you to know this, so you need to educate yourself. Check to see if you’re eligible for the program with the repayment estimator tool.
It’s also important to stay enrolled in this program, which you need to do manually. You need to requalify each year if you’d like to continue paying off your loans at this discounted rate. Don’t count on your loan lender to remind you of the deadline—do it yourself.
Loan Forgiveness Options
The US Department of Agriculture offers a Veterinary Medical Loan Repayment Program that will pay up to $25,000 each year toward qualified student loans for eligible veterinarians who serve for 3 years in designated areas where veterinarians are in short supply. Click here for a link to other state-specific options.
No Forbearance (If Possible)
If you can’t make your loan payment but don’t qualify for a deferment, your loan servicer will try to offer you something called a forbearance. This is the absolute last thing you want to do with your student loan. A forbearance allows you to reduce or eliminate your payments for a period of time while your interest continues to pile up.
Instead, ask your lender about income-driven plans. If this is a private loan, the payment plan is unlikely, but you can still ask for an extension of the term of a loan or for lower payments.
Set Up Auto-Payments
Whether federal or private, you should be able to set up auto-payments for your loans. Use the servicer’s own online interface to take the loan amount from your bank account on the same date each month without ever having to worry about being late. Some borrowers even offer interest rate discounts if you enroll in an auto-payment plan.
By doing this, you can also be sure your bank or servicer is using your payments exactly as you intended. You’re in control and can track what happens with each monthly payment. Don’t use your bank’s bill-pay system because your service may ignore your instructions if you either write on the check or attach a memo. Likewise, sending checks through the mail could result in lost, late, or misplaced payments.
Check Your Credit (Again)
Always stay on top of your credit report, which can help you figure out what your servicer is up to. Your credit report will alert you to any late payments or other potential problems. You can access a free copy of your credit report every year from the three major credit bureaus—Equifax, Experian, and TransUnion.
Be the Watchdog
When it comes to your student loans, you need to be informed of what you owe and have a plan to repay that amount. Don’t be afraid to question your loan servicer, and always make sure to double check their work. You need to be the watchdog of your own student loans to set yourself up for success.