Henry Chapman made monthly payments on his student loan for what seemed like most of his adult life. After more than 25 years of chipping away, he was finally starting to see that this once insurmountable debt was only a few years away from being history.
A surprise inheritance couldn’t have come soon enough and before you know it Chapman was mailing off a check to Navient for $10,000. He stamped the letter and sent it out, thinking that after this payment he would only have a few more payments left.
A month went by and his wife asked, while she was working on the family budget, “Didn’t you send that check off a few weeks ago?”
Chapman thumbed through his checkbook and confirmed it was sent over three weeks prior. When he called customer service, the agent argued that he had sent the check to the wrong address. Chapman knew in his mind he had sent it to the correct address, but he went back and double-checked. ”They wanted me to believe that where I sent it had nothing to do with Navient,” said Chapman.
The check had cleared so he continued to call and jump through hoops for about an hour each time without getting a straight answer, a common issue for those who have dealt with certain school loan lenders.
Chapman fought with the company about the whereabouts of his money. Finally, after two weeks, he was able to speak to a supervisor who issued him a refund.
All Chapman was trying to do was make extra payments to pay down his balance and diminish his debt quicker. What he thought was a routine action became a thorn in his side for over a month.
In most instances, if you have the extra money, paying your loans down is a great idea. According to qz.com, “Five issues took 78% of complaints last year. Borrowers either complained payments were mishandled; they received bad information; had problems or couldn’t reduce payments; couldn’t get flexible payments, or didn’t agree with fees charged.”
Referring to the above statistics you can see how making a simple payment could easily turn into a big headache.
Don’t be discouraged. If you can make the extra payments, continue to make them. Any payments you can add on top of your regular monthly payment will help you get to the finish line earlier. But, make sure you read all the fine print and ask a lot of questions. The rules and regulations aren’t put in place necessarily to make it easier on the borrower.
Here are a few tips to help you take control of your student loan repayments:
Double-Check ALL your addresses and figures
Since most of these companies process many different loan types in hundreds of different ways, make sure you have the correct address and amount you need to pay. Most of the time it’s easiest to get this information directly from an agent. Also, make sure you are specifying on the website payment screen or on your check whether you are making an early payment or an extra payment. They are two completely different things. An early payment will just post to your account as a payment for the upcoming month. An extra payment, will post as an additional payment and help you chip away at the interest; reducing your total interest and loan payments.
If you are sending a check without an invoice for the payment, you should consider typing out a letter so it can be sent with the check. We recommend typed so there doesn’t have to be any translation of handwriting on the receiving end.
Also, in your letter, you will want to add any specific payoff information including, which of the loans, if you have multiple loans handled by the same company, that you wish to have the payment applied to.
Once again, double and triple check your information. Once you send it in, consider calling the lender within 7 to10 days to make sure they received it. This is the pro-active way to make sure you stay on top of it.
If you don’t see your extra payment applied, or applied correctly, it’s time to call your lender.
Send the payment in on time
Another risk you might run into when sending in an extra payment, especially if it is not accompanied with all the proper information, is having the loan company put the money toward outstanding fees and late charges if they have accumulated. By the way, this is how the federal law requires these companies to process payments. Then whatever is left over is paid towards principle, since most of your regular payment will cover the interest.
It is really disheartening to send in an extra payment only to see it applied incorrectly.
A good strategy for sending in your extra payment is to send in your regular payment, follow it up with a call to make sure it’s been received, then send in or submit your extra payment right away.
Always read over the document several times and follow up your payments with a phone call or email. This should help you eliminate most of the errors.
In consideration for all of the above, the main question you need to ask is:
Will this work for my loans?
Talk to a loan counselor or someone familiar with all the different loan types and share your payoff plan with them. Make sure that sending in the extra money is working for you and not against you. Also, don’t forget things like income-driven plans and personal loan forgiveness programs. In these programs, you are already often working with a lowered payment plan or number of total payments. If you are enrolled in either, it might work out best for you to continue regular payments and invest or save the extra money.
Either way, do your research, communicate with your lender, and make sure you ask a lot of questions. For more information about getting in control of your student loan debt, check out our friends at aleevly.com.
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