How to get my student loans back on course?
I fell behind on my student loan payments, and I’m ready to get them back on schedule. Where do I start?
Restoring your loans to good standing won’t be a gentle, painless process.
But there are options to get your loans and credit score back on track, and there are people out there who will help, starting with me.
For some borrowers, wanting to feel less stressed and anxious is the rationale for addressing their debt. For others, the catalyst is a big life change. Stanley Tate, a student loan attorney based in St. Louis, says his clients are often about to get married, buy a house, return to school or retire. Poor credit and unpaid loans hold them back.
Here’s how to use the motivation you feel to take action on your loans right now. Federal or private?
Repayment options and strategies differ dramatically depending on the type of student loans you have.
If you have federal loans, they’ll be listed in the government’s National Student Loan Data System. You’ll also see your servicer, the company that collects payments and helps you enroll in repayment programs.
Private loans, originated by banks, credit unions or state loan programs, should be listed on your credit report. Access it for free from each of the three credit bureaus once a year at AnnualCreditReport.com.
Restart repayment
If you’ve missed one or two federal loan payments, your account is considered “delinquent.” You have 90 days to catch up before those missed payments are reported to the credit bureaus, which will negatively affect your credit.
Most federal loans don’t go into “default” until you’ve missed payments for nine months. That’s when the scary stuff starts to happen: The government can collect unpaid loan debt by taking money directly from your paycheck, tax refund and Social Security check.
Before you go into default, consider switching to an income-driven repayment plan. That will lower your bill to a more manageable amount. You can sign up for one of these plans on studentloans.gov or by working with your servicer.
Private student loans can go into default as soon as you miss a payment; the loan may be “charged off ” and sent to a collection agency 120 days later.
Address default
According to U.S. Department of Education data released last month, 11.5 percent of federal loan borrowers who entered repayment between Oct. 1, 2013, and Sept. 30, 2014, defaulted on those loans by Sept. 30, 2016. If you’re one of those federal loan borrowers in default, you have two options for getting out of it: rehabilitation and consolidation. For more detail, contact the Education Department’s Default Resolution Group at 1-800-621-3115.
Rehabilitation requires you to make nine income-based payments on a defaulted loan within 10 months. Later, you’ll still see late payments on your credit report, but the record of default is removed. That may hike your credit score about 25 points, says Persis Yu, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center. Consolidation can get your loan out of default in a few months, but a default record stays on your credit report.
Private lenders generally don’t offer specialized programs to get out of default. If your private loan is in default, search for a free or low-cost legal aid clinic on LawHelp.org.
Jonah Friedl was trying to persuade his fellow Washington State University students to come eat at the hotel where he worked and felt like Facebook and social-media ads were his only option.
“That’s really where the line stops with millennials,” he said. Physical ads like billboards and posters felt old-fashioned.
Then one morning during junior year in 2014, while walking to class after a graveyard shift at the hotel, Friedl looked around at the crowd of students and thought, “Wow, there’s a lot of undivided attention here.” Friedl walked an hour and a half every day: What if he could put a billboard on his backpack?
That idea became Seattle-area startup Nomad Technologies, which hires students, commuters and event-goers as “nomads” to carry iPads on their backpacks around campuses, metropolitan areas, sports events and trade shows. The iPads display advertising from a client like YouTube, Zipcar or Limebike — three of the company’s 30 current clients — and the nomads answer any questions from onlookers about ads they have on their backs.
Friedl linked up with angel investor Dave Greschler, who founded software company Softricity and sold it to Microsoft in 2006. Friedl grew up down the street from Greschler, and the entrepreneur’s kids were friends of Friedl’s.
Nomad raised $100,000 this spring from angel investors, including Greschler, who is now COO. The company has four fulltime employees, with Friedl as CEO.
Prospective nomads can sign up online, give the ZIP code where they walk, links to their Facebook and Instagram pages and their interests. Nomad Technologies uses this information to look for outgoing people who can speak on behalf of a brand.
The company doesn’t just focus on college students; it also signs up metro-area commuters.
Some nomads have iPads already, and the company just mails them a waterproof case that attaches to a backpack — but most lease their iPads from the company.
Nomad Technologies tracks where its walkers go and uses general demographic data to estimate how many eyes would see the iPad ads, using that data for a pay scale — like surge pricing for Uber. Friedl says the company pays, on average, between $10 and $20 an hour, and its nomads usually make about $100 a week.
There are about 100 daily active nomad walkers on 11 campuses in four states and at events like a gaming festival in Seattle in September.
Nomads can make more money at trade shows handing out swag or promotional material.
“At trade shows, things are cluttered, people want to break through the noise,” Friedl said. “You can just order up 10 nomads.”