Follow the recommendations on the CFPB’s student loan to-do list to manage deadlines, re-certifications, and payments so you can stay on top of your debt. For many people, student loan management is straightforward; those people make their monthly payments, and eventually the loan is paid in full. However, student loans aren’t always the easiest debts to deal with for people who struggle with large payments, or who have more than one type of loan or more than one lender. The loans can be even more confusing for those people enrolled in certain repayment or forgiveness programs.
The Consumer Financial Protection Bureau (CFPB) has created a student loan “to-do” list that can help you manage your loans as a whole. This short list gives you a framework to follow to ensure your loans and your participation in different programs stay in good shape. Completing these tasks doesn’t take a lot of time, and they will save you time and effort should you find an error. You’ll have the opportunity to fix the error now before it grows into a major headache.
Check Your Public Service Loan Forgiveness Program Enrollment
If you are enrolled in the Public Service Loan Forgiveness (PSLF) program, you must check your progress at least once a year, if not more often. The PSLF has had a number of problems with enrollees finding out their time at work and their payments never qualified. In many cases, this was due to the borrower truly not managing the loan properly. But for others, a lack of information and confusing requirements hampered their ability to enroll and pay as required. (One lawyer, who had his loans forgiven successfully, noted that Reddit was often more helpful than his loan provider.) To minimize the chances of disqualification or rejection, follow the Department of Education’s steps for making it through the PSLF program:
- Submit an employment certification form every single year. Set up as many calendar notifications as you need to remind yourself that the deadline for recertification is approaching. Check over the form several times to ensure there are no mistakes. Send in the form early, and verify that it was received and that there are no problems with the form, such as missing information.
- Submit an employment certification when you change jobs, too. Forgetting this could derail your efforts to have your loans forgiven.
- Ensure you have consolidated any loans that need to be consolidated. Loans taken out before 2011 and certain types of loans have to be consolidated. If you forgot about this step before, do it now, and each year, verify that there have been no additional consolidation requirements added for your remaining unconsolidated loans.
- Get out of any deferment or forbearance programs. There may be times when you need that break due to economic hardship, but any months you spend in forbearance or deferment do not count toward the program.
- Ensure you are enrolled in an income-driven repayment (IDR) plan. This is a critical step for the PSLF program, and you can be denied forgiveness if you were not enrolled in one of these plans. Congress did create a fund in 2018 to help borrowers who were denied forgiveness due to not being in an IDR plan, but it’s much better if you enroll immediately and get your loans forgiven the first time you attempt to qualify. And remember to re-enroll in the IDR plan each year! You’ll receive notices that your IDR plan is up for renewal a few weeks before the deadline.
- Remember to make one — one — payment each month. Do not skip months. Do not make multiple payments within one month because only one payment will count.
Complete Your Income-Driven Repayment Program Renewal
Not every loan qualifies for PSLF, but many still qualify for a reduced monthly payment. You have a choice of four different income-driven plans including:
- Pay as You Earn
- Pay as You Earn (Revised)
If you’re having trouble making payments, or if your payments are placing a real strain on your monthly budget, see if you qualify for one of these programs. If you’re already in one of these programs, remember to complete your re-enrollment/recertification form each year. If you don’t re-enroll, your payments will go up. You can lower the payments again by completing the proper paperwork (depending on the specific plan you’re in), but why go through months of higher payments when you could keep them low?
A critical step in re-enrollment is ensuring that the correct tax return is used in the certification. At one point in the re-enrollment/recertification, you’ll be asked to enter information that will link your tax return; verify that the year that appears is the most recent return you filed. This normally is not an issue except when your IDR recertification deadline occurs close to the date you filed the return. It can take a few days for new returns to show up in the system.
Look Over Your Credit Reports
Everyone who has student loans, even those who have no trouble making payments, should check their credit reports each year and look for errors, including any errors in the entries for student loan servicers.
- Get your free credit reports from each bureau once a year. Individual credit bureaus may have programs that allow you extra free copies from that bureau; if so, space out the free reports and check your credit from that bureau a couple of times per year. You can also space out the initial free copies; in other words, check one bureau in January, another in May, and a third in September, with any extra free copies obtained in between those dates.
- Look over the reports and ensure that you recognize all of the accounts, and that all of the accounts report correctly. For example, an account you paid off should read as paid and not late. If you have a student loan in deferment or forbearance, the loan entry on the report should reflect that. Dispute incorrect information quickly.
- Check over your personal information; correct your birth date, addresses, and employers as necessary. Be sure you recognize all the prior addresses listed on the report.
- Look at the inquiries and dispute any you don’t recognize. Inquiries that you didn’t ask for and that are not from companies that are already on your report are red flags. Your current creditors may check your report without asking you; for example, your credit card company may check your report to see if you’re eligible for another type of card. But an inquiry from a bank or person you don’t recognize is a sign someone may have tried to access your credit.
- Consider freezing your credit reports.
As a summary of the student loan to-do list, the CFPB and yes, your loan provider, both want you to be able to pay your loans with as little stress as possible. By keeping an eye on how your loans appear on your credit report, and by completing re-certifications on time, you can avoid a lot of problems and have a much smoother financial life.