If you have many separate student loans, keeping track of your monthly payments can be daunting. This task is made even more burdensome if you have federal loans that are serviced by multiple loan servicing companies, Perkins loans that are serviced by your college or graduate school, and private student loans from multiple lenders. When you have rent or a mortgage, utilities, car payments, cell phone payments, and other bills to manage on top of everything else, it’s easy to miss a student loan payment.
The problem is that missing a payment on any of your student loans can place that loan into delinquency. Delinquency is a fancy term that simply means you are behind on your payments. The problems is that certain loan servicers and lenders report delinquencies rather quickly to credit reporting agencies, which could damage your credit score. If you are delinquent for too long, your loan may be placed into default, which is bad news. While federal loans generally provide for several months of delinquency before a loan goes into default, some private student loan lenders are not nearly so accommodating, and your loan may be in danger of default sooner than you think.
One solution for dealing with this threat is to consolidate your federal student loans, since this can simplify the repayment process. Another easy solution is to enroll in auto-debit programs. Most student loan servicers offer this both for federal and private loans. An auto-debit program allows you to permit the lender/servicer to automatically debit your bank account or debit card for your monthly student loan payments. That way, you don’t have to worry about keeping track of every single student loan payment every month. Your only responsibility is to manage your budget so that you have enough funds available to cover all of your payments. You usually can set the date of the auto-debit, so you can choose to have all of your payments made on one single day each month, or you can split your payments up during the month if that’s easier for you. As far as I know, you can cancel any auto-debit program at any time, although there might be a period before the cancellation takes effect.
I’m enrolled in auto-debit programs for all of my student loans, and I find that it has made managing my repayment obligations much easier. It might be a little unnerving to not physically write that check or click that “pay now” button every month, but at least I don’t have to worry about missing a payment. I’d check it out if you haven’t already.