Paying back student loan debt
Hi Terry, My grandson has student loans to pay back 2 I believe are federal. The other3 are Fannie Mae loans which are at a set interest rate. I’m not sure what the actual debt amount is, but he wants to start paying them back. With the pandemic changes I’m not sure how to advise him. I know federal loans are deferred till 2022. Can you advise? Love hearing you on John Williams and trust your knowledge and foresight. Thank you!!
Terry Says
Well, the first thing he needs to do is make a list of his debt. He doesn’t have “fannie mae” as they don’t do student loans! These are probably Sallie Mae PRIVATE student loans.
If he just graduated this spring, he needs to contact each of his lenders and set up a repayment plan. If he can pay extra every month on the principal, that would help pay them down more quickly. Start with the highest rate loans to pay extra on.
If he has already started repaying his loans, yes — he should continue to make payments even during this period of forbearance, which ends January 31st. That means he is paying less interest and will pay the loans off faster.
Are you considering helping him? If so, you would need to make a direct check out to his loan servicer, NOT give the money to him. But don’t impoverish yourself as a grandma to help him out.
I think you’ll both enjoy this excellent article on the subject from NerdWallet.
