It’s crucial to play watchdog over your student loans, especially during your first year out of school. If not, you may miss out on valuable information and face fees, penalties and higher interest.
Why? Well, private student loans commonly get bought and sold in the secondary market when you enter repayment. Your lender is responsible for notifying you and letting you know who your new servicer is. The terms of your loan won’t change, but there may be a new address to which you must send monthly payments. If you don’t keep up with your snail mail or automate your payments as soon as you enter repayment, you could be kept in the dark about the changes and fail to send your payments to the right servicer. Over time, you may suddenly discover your loan balance has ballooned and you’re in default, all while you’ve been sending in your checks (albeit to the wrong servicer). This has, unfortunately, happened to many students.
[Related article: Student Borrower Q&A: Can I Prepay My Loan?]
To protect yourself in case you have a change in servicers, remember the following:
1. If you move, make sure to notify your lender about your change of address. If your lender has a parent’s address on file—while you’ve moved to your own place—you may miss out on important information about the status of your loan.
2. Automating your payments ensures you won’t have to depend on snail mail to hear about changes to your loan. Sign up for e-payments as soon as possible. This way, you’ll receive notices via email and your payments can electronically be rerouted to the new servicer. You may not have to change a thing.
3. Make sure your payments are getting deducted. Each month, check your bank balance to make sure your servicer is cashing your checks. If not, follow up with your lender to make sure your payments are going to the right place.
[Featured Product: Monitor your Credit Reports and Scores]
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