5 Things Every Student Loan Borrower Needs to Know

Here are five things you definitely need to know as a student loan borrower.

Have you looked at the cost of attending college recently? The price of tuition and fees has increased, on average, $280 per year for the last decade, according to College Board. That adds up over time, so it’s no wonder many turn to student loans to afford their education.

But now that you’re approaching the end of college — or perhaps you’re already done — it’s time to figure out how you’re going to repay those loans. Before you make a decision about how to move forward, here are five things you need to know as a student loan borrower.

1. The Difference Between Federal & Private Student Loans

The first step in deciding how to pay off your college debt is knowing whether you have federal or private student loans.

Federal student loans are issued by the government. These loans have interest rates set by Congress and come with certain protections and benefits (like income-driven repayment options, deferment/forbearance and loan forgiveness).

Private student loans, on the other hand, are issued by financial institutions. They usually have higher interest rates than the loans you get from the government. Private loans don’t come with the same benefits as federal loans. But some of the best lenders will offer options to borrowers who experience financial hardship.

To simplify the repayment process, you can consolidate all of your federal loans together to make one payment each month. But you can’t include private loans in a federal consolidation.

On the other hand, if you refinance your loans privately, you can include federal and private loans together in one big loan. However, once you refinance your federal loans, you lose those benefits and protections mentioned above.

When I was faced with this choice, I consolidated my federal loans and refinanced my private loans separately. Sure, I made two payments for a while until I paid off the private loans. But this ensured that the bigger chunk of my debt — my federal loans — retained protection.

2. When & How to Enroll in an Income-Driven Repayment Plan

If you can’t afford your student loan payments, there is hope. If you have federal loans, you can set up a repayment plan based on your income.

The government offers income-based repayment plans for different situations. Your payment each month is limited to a percentage of your income. At the end of a set term, if you still have some federal student debt left, the remaining balance is forgiven.

You can’t get income-based repayment for private student loans, however. If you refinance federal student loans privately, you lose access to income-driven repayment options.

Be careful when choosing income-driven repayment, though. A longer loan term and a lower monthly payment can mean that you actually end up paying more than you expected over time. On top of that, there is a good chance that loan forgiveness might come with hefty tax consequences.

There are a number of student loan forgiveness programs that can help you with your student loan debt.

3. How Much You Owe & to Whom

By the time you’re done with college, it’s not surprising if you don’t know exactly how much you owe. Thankfully, this is a simple problem to solve.

The Department of Education will usually assign a servicer to your account. Private lenders usually will, too. Your loan servicer is the middleman between you and your student loan lender. They’re in charge of facilitating payments, making sure the terms of the loan are met and working out a payment plan if you’re struggling to keep up.

Of course, if you have several student loans, you probably also have several servicers. And it’s not always easy to figure out who they are.

To find federal student loan information about what you owe and who services your loan, go to the National Student Loan Data System. Select “Financial Aid Review” and accept the terms and conditions. You will need your FSA ID, but you can create one if you don’t have one yet. Once you’re in, you can see how much you owe, how much you’re paying in interest and how to contact your loan servicer.

When it comes to private student loans, the best way to find out who services them is by checking your credit reports. Your credit report will list all your open accounts. (You can view a free snapshot of your credit report, with updates every two weeks, on Credit.com.)

4. Refinancing Your Student Loans Can Save You Thousands

If you want to save thousands of dollars over the life of your loans, refinancing your student loans can be a solid option. Depending on your credit and income, it’s possible to get a much lower interest rate through refinancing.

Refinancing means taking out a new loan with a private lender to pay off your existing loans. The goal is to consolidate student loans, get a lower rate and/or secure a new repayment term.

The decision to refinance should be made carefully, however. Again, refinancing federal loans with a private lender means forfeiting many government-backed benefits.

Check with different lenders to see what rate you can get if you refinance. Also, consider your eligibility for income-driven repayment. Many high-earning professionals with a lot of student loan debt don’t qualify for income-driven plans. In such cases, it can make sense to refinance privately to take advantage of long-term savings.

5. Extra Payments Can Cut Years Off Your Repayment (& Save You Money)

Finally, making extra payments can help you save more money over time. If you don’t want your student loan debt hanging over your head, you can pay it off faster as your income increases.

Extra payments reduce your principal balance. That cuts down how much you pay in interest and the how long it takes to pay off your debt. Consider refinancing to a lower interest rate, then making extra payments to supercharge your savings and pay off your loans faster.

You can even use a student loan prepayment calculator to see just how much time and money you’ll save.

Student loans are a necessity for most of us. However, they don’t have to prevent you from living a good life. Explore all these options and figure out what is likely to work best for your situation.

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6 Ways Student Loans Could Impact Your Credit Score


When most 18-year-old college freshmen sign on the dotted line to take out federal student loans, they’re not thinking about credit scores. They’re thinking about class schedules, life goals and avoiding the infamous “freshman fifteen.”

But the truth is that student loans can (and do) impact your credit scores from the very moment you take them out. Whether you’re a brand new college student who hasn’t even started repaying student loans yet or a 30-something still struggling to pay back that debt, you need to understand how student loans can impact your credit scores and your ability to borrow. (You can see how your student loans may be affecting your credit by viewing two of your credit scores, updated every 14 days, on Credit.com.)

1. They’ll Likely Open Your Credit File

Most straight-from-high-school college freshmen don’t have a credit file to speak of before taking out student loans. But because the federal government doesn’t require good credit for most types of student loans, that doesn’t matter. As soon as you take out a loan, you’ll have a credit file opened, likely with all three major credit reporting bureaus. This is the start of your credit history and subsequent numerical credit scores.

2. They Can Help Establish a Longer Credit History

One portion of your credit scores comes from the length of your credit history. The longer you’ve had credit, the higher your score will be. For many students, student loans are their first piece of credit. And because they’re likely to stick around on your credit reports for ten years or more while you’re in repayment, student loans can give your score an automatic lift.

3. On-Time Payments Can Keep Your Score Growing

On-time payments are the most heavily-weighted portion of the credit score algorithm. After all, lenders want to be sure you’ll repay your loans on time each month. Paying your student loans on time from the time you enter into repayment can keep your credit scores growing, slowly but steadily.

One thing to note here is that if you have to put your loans into deferment or forbearance due to financial hardship, this shouldn’t harm your credit scores. Call the lender as soon as you know you’ll be unable to keep making payments. They can put the loan into forbearance, which will stop payments for a while. This doesn’t get you out of repaying the loan, of course, but it will save you from late payment reports on your credit scores.

4. Missed Payments Can Quickly Tank It

Steadily repaying your loan with on-time payments will increase your scores, but slowly. On the flip side, missing payments can tank it, and quickly. However, most federal student loan servicers won’t report a payment as late until it’s been 60 days late by the end of the month. So you often have more grace with these loans than other types. Still, it’s best to get into the habit early on of making on-time payments each and every month.

5. They Can Help You Add Variety to the Mix

A few high school and college students have other debt coming into the student loan process. For instance, you might have a low-limit credit card on your report already. If this is the case, adding student loans as an installment loan can add variety to your credit file. Because variety is one thing lenders look for, this can also help boost your credit scores.

6. Resolving Delinquency Can Immediately Increase Your Score

Resolving delinquency on other types of loans isn’t always easy, and the delinquency reports may take months or even years to recover from. This isn’t always the case with student loans. If you lose your job, for instance, and miss three months’ worth of payments, your score will quickly fall. But if you later work out with your lender to back-date the deferment of your loan, they can forgive those late payments, effectively erasing them from your credit scores.

It’s better to never become delinquent on your student loans, of course. But if you do, resolving the problem as quickly as possible can help you increase your credit scores almost immediately.

Bonus: Your Debt-to-Income Ratio Can Be Important

It’s a common misconception that a person’s debt-to-income ratio — the amount of your minimum payments each month versus the amount of income you make— is a part of your credit scores. It’s actually not. Credit bureaus don’t know how much money you make, and they don’t really care. As long as you’re meeting your obligations each month and your credit utilization rate is in good shape, your credit scores should stay intact. (Note: Your credit utilization rate, also referred to as your credit-to-debt ratio, is essentially how much debt you’re carrying versus the amount of credit extended to you. For best credit scoring results, it’s generally recommended you keep the amount of debt you owe below at least 30% and ideally 10% of your total available credit limit.)

Lenders, on the other hand, care about debt-to-income ratio very much. If 50% of your monthly income is eaten up by minimum debt payments, you’ll likely have trouble obtaining a mortgage.

So even though your minimum student loan payments in comparison to your monthly income don’t affect your credit scores, they can affect your ability to borrow. This is why it’s so important when taking out student loans to examine how much your chosen career is likely to earn you. Then, compare that to what you’re likely to pay in minimum student loan payments before you sign on the dotted line for that loan.

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Should I Pay Extra on My Student Loans?


When you start repaying a student loan, it’s a bit of a buzzkill to see a large chunk of money come out of your bank account. Month after month, you kiss that $350 goodbye (or whatever your regular payment is), trying not to think about everything else you could’ve used it for. Eventually, you get used to it, for the decade or more you make that same payment.

At least, that’s how it works if you enter a standard repayment plan on a fixed-rate student loan, like most borrowers do. It’s monotonous but predictable: Keep making that $350 payment on time, and after 10 years (or whatever the repayment term is), you’ll be out of student loan debt.

You can speed it up, if you want, and if you can afford to. Paying more than your minimum student loan payment can be a good financial move, but there are a few things you need to know before you decide to do it.

Consider the Benefits

First, the perks: If you pay extra on your student loans each month, you can get out of debt faster, save money in the long run, give yourself a little budget flexibility and improve your credit. Here’s a quick explanation of each of those advantages.

Get out of debt faster: This one’s pretty self-explanatory. The more you pay in addition to your minimum student loan payment, the faster you’ll drive down your outstanding student loan balance. You can use a student loan payoff calculator (there are all sorts of them online) to help you figure out how much to pay to get out of debt by a certain date.

Save money: The faster you pay off your student loan debt, the less time it has to accrue additional interest. So if you have multiple student loans at different interest rates and saving money is a high priority for you, you may want to focus on paying more on the high-interest loans first.

Flexibility: Say you have a 10-year repayment term, but you want to get out of debt in five years. You can calculate what your loan payment would be for a five-year repayment term, and plan to pay that much each month. But if you run into financial difficulty at any point in your loan repayment, remember that your required loan payment will be less than you’ve actually been paying. You can go back to paying the minimum, which allows you to use that money you’d been putting toward paying off your loan faster toward another financial obligation, all while keeping your student loan in good standing.

Improve credit: One of the most important aspects of your credit score is the amount of debt you have, and while that’s mostly determined by your use of revolving credit, installment loans like student loans also have an effect. Credit scoring models look at how much money you’ve borrowed and how much of it you’ve repaid — the more of your debt you’ve repaid, the better. Paying down your debt faster also improves your debt-to-income ratio, which isn’t part of your credit scores but is often factored into loan decisions, like a mortgage application.

Do the Math

If you’re lucky enough to be in a position where you can afford to pay more than you need to on your student loans, make sure you’re doing what’s best for you financially. This requires a little math. Ask yourself, Is the money I’ll save in interest on my student loan greater than the return I’ll get by putting more into my 401K? If not, maybe you want to put that extra money toward saving for retirement, rather than attacking your student loan debt.

Numbers aren’t always the answer. Sure, you might make more money by investing your extra resources, but some people just want to get out of debt as fast as they can, no matter what. That’s fine, too. It’s a personal decision, but it’s important to make that decision after considering all your options. Above all, make sure you can really afford to put extra money toward your student loans, because dedicating financial resources to student loan payments while you’re going into credit card debt for everyday purchases doesn’t make a lot of sense.

Pay Attention to the Details

If you’re planning to do something different with your student loan repayment, communicate with your student loan servicer. Make sure any extra payments go toward the principal balance by making your desire known to the servicer in advance of payment and check your account after it’s gone through. These things get messed up all the time, so if you want to do it right, you need to put in a little extra work.

It’s also important to keep an eye on your credit standing, in addition to your student loan statements every month, to make sure everything is going as planned. You can keep tabs on your credit by getting a free credit report summary, updated every two weeks, on Credit.com.

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Do the New Student Loan Servicing Rules Go Far Enough?

Last month, the Department of Education announced a new set of directives to target systemic problems that have plagued federal loan servicing for years. Will the new recommendations help, or will they end up being just another stack of papers piled on to an already labyrinthine federal loan bureaucracy?

How Borrowers Are Shortchanged

One of the main criticisms of the student loan servicers hired by the government is that they are prioritizing profits over helping federal loan borrowers. This isn’t entirely unexpected, since federal loan servicers are private for-profit companies. With a steady drumbeat of negative press surrounding federal loan servicing, there have even been calls for the entire federal loan servicing process to be run by the government.

Still, instead of scrapping the private contractor loan servicing system and replacing it with another government department, the Department of Education is making a serious effort to align the private loan servicing companies’ incentives with its vision for a streamlined process. The fact that this directive is a joint effort by the Department of Education, the Consumer Financial Protection Bureau, and the Treasury Department shows that the government is serious about reforming student loan servicing.

The newly released policies aim to address some of the biggest functional problems with federal loan servicing, such as borrowers not being fully informed about options for different payment plans, or how to use Direct Consolidation to make Federal Family Education Loans eligible for other programs like Public Service Loan Forgiveness. How they do this is, first and foremost, by changing the way loan servicers are compensated for helping students in danger of default stay current on their payments.

From a business standpoint, it doesn’t make sense for loan servicers to spend more time only to receive the same payment. Since loan servicers are for-profit companies, it is up to the Department of Education to provide them with incentives and contracts that align with its overall goals of reduced defaults and better communication with borrowers. When a loan servicer is compensated with the same amount whether they place someone in a forbearance (a short-term solution) versus an income-related payment plan (a long-term solution), they will inevitably do what is the most economically feasible — using the option that requires the least amount of time. This is just one example of how a fixed-rate financial incentive system shortchanges borrowers who need effective student loan counseling from their loan servicers.

Going a Step Further

The Department of Education implemented a policy in 2014 to reduce loan servicers recommending forbearance as a first-choice option to struggling borrowers. This was in favor of longer-term solutions like income-driven payment plans. These new policies go a step further to provide financial incentives for loan servicers to keep borrowers current by changing from a fixed-rate compensation system to one that rewards loan servicers for taking additional time and effort to provide specialized assistance to borrowers who are at the highest risk of default.

For loan servicers that have drawn more regulatory scrutiny and complaints than others, there needs to be more monitoring and accountability, which is emphasized in the new policy directives. By holding loan servicers accountable and not blindly renewing their servicing contracts despite some performing much worse than others, the Department of Education creates another financial incentive for loan servicers to improve. If they don’t, their bottom line could suffer as a result of fewer loans being allocated to them.

Streamlining the Process

By having loan servicers use Department of Education-branded letterhead for all communications, borrowers won’t be as confused as when they receive letters from their servicer — especially if they have switched servicers or aren’t aware who their servicer is after leaving school and beginning repayment. The Department of Education also wants to reduce any unnecessary loan transfers (those not initiated by the borrower). Being unable to determine which loans are private and which are federal is one of the most common issues I hear about from student loan borrowers. Creating uniformity with letterhead and branding for federal loans regardless of which company is servicing them should help solve that problem.

Establishing a single online portal will also make it easier since borrowers now can log into Studentloans.gov and separate loan servicer websites as a federal loan management portal. It makes sense to just have one web portal to eliminate the overlap and any resulting confusion.

Improving overall customer service metrics such as hold time and response time, as well as implementing a guideline for processing any income-related payment plan application in 10 days or less, are common sense ideas that are aimed at increasing federal loan servicing efficiency and borrower satisfaction.

Another goal is to make sure loan servicers are reaching out to borrowers who have made mistakes on their income-related payment plan applications, or who have submitted incomplete applications. This is important because the newly redesigned income-related payment plan paper applications have been criticized for being harder to complete than the previous versions.

There is increased emphasis on recertification notifications for borrowers on income-related payment plans that require yearly reverification of income and tax filing status, so that borrowers don’t fall off the plan and end up back on a payment plan they can’t afford, which can lead to default.

Another part of the initiative is to ensure that borrowers aren’t being punished for processing delays that are not their fault, and that they will remain on their income-related payment plan as long as they get the recertification in by the deadline — and if they miss the deadline, that they will receive guidance from their loan servicer for getting back on track.

Some other directives in the new policies are also a continuation of previous attempts to fix loan servicing problems. Disabled borrowers who may be eligible for Total and Permanent Disability Discharge were having their SSI payments offset due to defaulted federal loans. Part of the servicing recommendations are aimed at continuing to improve that. The Department of Education has been working closely with the Social Security Administration to do a “data match” of borrowers who are on disability and then trying to proactively reach out to them to inform them about the possibility of a loan discharge. Earlier this year, the Department of Education identified hundreds of thousands of borrowers who may be eligible for TPD discharge by coordinating with the SSA to identify them.

Addressing Other Problems

All of these new policies combined could also go a long way toward reducing the need for outside assistance that “student debt relief” companies try, and often fail, to provide. These companies charge hundreds or even thousands of dollars to prepare applications for free programs like Direct Consolidation and IBR — often without disclosing that the borrower could have applied for free on their own. Even worse, many “student debt relief” companies try to use official-sounding names so that borrowers confuse them with legitimate federal loan servicers.

By addressing the core structural problem with loan servicing — financial incentives — and moving away from a fixed-rate compensation system regardless of servicing outcome, the Department of Education may be able to reform loan servicing with the ultimate goal of reducing defaults and improving the overall experience for student loan borrowers.

Whatever the outcome, one thing that is clear from this policy directive is that the Department of Education has identified some of the main problems with loan servicing after intensive study, research, and coordination with other federal agencies.

If serious efforts are then made by the loan servicers to put these policies in place, there’s a real chance that borrowers will have a better experience repaying their loans, and that fewer borrowers will experience the devastating financial impact of student loan default.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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Parents Increasingly Expect Kids to Pay for College


With college tuitions skyrocketing, it’s no surprise parents are worried whether they have enough to cover the cost. According to the fifth annual survey from Discover Student Loans, nearly half (48%) of 1,000 adults surveyed with kids aged 16 to 18 expect their child to pay for most or all their education, up from 39% in 2012.

“While a vast majority of parents still report that they want to help their children pay for college, it’s clear that students are being asked to take on more financial ownership than in previous years,” Danny Ray, president of Discover Student Loans, said in a press release. And often they aren’t prepared.

Perhaps to ease the pain of that burden, nearly 43% of parents plan to limit their child’s college cost based on price, while 55% say their children plan to use loans to help pay for college, up from 50% in 2012.

Fortunately, parents seem willing to help their children if they take out a loan, Discover found, with 61% saying they’re very or somewhat likely to help them pay back loans, up from 55% in 2012.

If you’re in the market for a student loan, it’s important to scope out all your options, lest you get saddled with a plan that’s less than ideal for your personal situation — or more than your budget can handle. Remember, defaulting on a loan can seriously damage your credit score, and because student loans are rarely discharged in bankruptcy, the debt could haunt you for years. There’s a handy new formula out that can help you determine just how much is too much when it comes to student loan debt. And, if you’re already paying your student loans, you can see how your repayments are impacting your credit scores for free at Credit.com.

More on Student Loans:

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9 Things Everyone Should Know About Student Loans Before They Graduate


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4 Things Soon-to-be Grads Should Know About Student Loans


It’s easy to have a stress-free attitude about student loan debt in college, especially if your pay period hasn’t begun. However, to some, student loans can be like speaking a different language, so it’s important to understand how they work before you fall into bad debt. Here are the top things to know before your student loans kick in.

1. There Are Different Repayment Options

Once students graduate, they are automatically enrolled in the standard repayment plan. However, there are other plans out there that may be more beneficial. Consider doing a little research on payment plans before your loans begin. Graduates are responsible for contacting their lender to find out when the first payment is due. You can then ask if you qualify for an extended or graduate payment plan.

If graduates expect to see a steady increase in their income over time, the Graduated Plan will likely be the right choice for them. With this plan, monthly payments start low so they’re affordable and then increase after two years, usually over the course of a 10-year plan. You can also choose an income-based plan, where monthly payments are based on how much you earn. These payments are usually lower than those of a standard payment plan.

2. Interest Can Kick in as Soon You Get the Loan 

An interest loan is tacked onto your loan automatically; sometimes this can be fixed, and sometimes it is variable. If you have a variable-interest loan, then this means your interest is subject to change over time. If you have a fixed-interest rate, then it will always stay the same. If you are a student working in college, then you may want to consider paying interest in school. This will help you pay off your loans quicker (and more easily) once you graduate. Keep in mind, interest accrues the second you take out the loan. If you choose to pay your loan early, however, your monthly interest payment while in school could be as little as $100 each month.

3. Deferment and Forbearance Are Two Separate Things

Under certain circumstances, graduates can receive a deferment or forbearance that allows them to pause or reduce their federal student loan payments. Postponing or reducing payments may help them avoid default. Forbearance allows you to make no payments, or reduced payments, for up to a year, but interest will accrue on your subsidized and unsubsidized loans (including all PLUS loans) during this period. A deferment is a period in which repayment of the principal and interest of your loan is temporarily delayed. Different situations can make you eligible, such as unemployment. Most deferments are not automatic; you’ll need to submit a request to your loan servicer.

4. The Sooner You Pay Off Your Debt, the Better

It’s important to research strategies to pay off your student loans as well as repayment options. Try to complete your exit counseling at your school to learn about your legal rights and responsibilities as a borrower. Then learn how much you owe and to whom. For example, ask yourself: Do you have federal loans and private student loans? How much do you owe on each? Find out when you can start making payments. Most forms of federal student aid will require you to start making payments after six months; private lenders may set other deadlines.

Soon it will be time to start repaying your loans. Understand that smaller monthly payments mean you’ll pay more over time, so if possible, make additional principal payments. This will allow you to pay your loan off faster and pay less interest over time. Budget carefully and identify expenses you can cut so you can put the money toward student loan payments. Lastly, try to avoid taking on more debt until you pay down your student loans. (You can track how your student loan debt is affecting your credit by viewing your two free credit scores, updated monthly, on Credit.com.)

More on Student Loans:

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Is There a Student Loan Gender Gap?


At first glance, it appears that student loan debt does not discriminate — today, 40 million Americans have at least one student loan account, with total loan debt at about $1.3 trillion. But new research suggests that women may actually have a harder time paying back these loans.

According to a study from the American Association of University Women (AAUW), based on data from the U.S. Department of Education, women who graduated in the 2007-08 school year have only paid off, on average, 33% of their student debt. Men who graduated that same year, meanwhile, have paid off an average of 44% of their student loans. And the difference gets even more pronounced for black and Hispanic women, who have paid less than 10% of their debt in the same time period despite working full time.

What’s Causing the Disparity?

Blame these struggles on the wage gap, AAUW said.

It’s been widely reported that woman today still earn only 77 cents for every dollar a man earns, and an earlier report from AAUW found that women who are one year out of college and working full time are paid, on average, just 82% of what their male counterparts are paid. This disparity in income can make it much harder for woman to achieve many of their financial goals — like buying a house, saving for retirement or paying off their college education, AAUW said. Moreover, the effects may be cyclical.

“The gap in debt repayment may also make it more difficult for women to take risks that could pay off in the long run, like changing job sectors or starting a business, further contributing to the pay gap as women move through the workforce,” AAUW said in a news release.

Dealing With Student Loan Debt

Unfortunately, addressing mountains of student loan debt — on top of a systemic wage gap — can be tricky. The escalating cost of higher education makes it difficult to avoid borrowing for college and, once on the books, student loans are very rarely discharged in bankruptcy.

Still, beleaguered borrowers may be able to ease their burdens by looking into income-based repayment options, student loan forgiveness programs, default rehabilitation or, even, refinancing with a private lender. (Remember, if you are looking to refinance, you may want to check your credit. A good credit score can help you qualify for better rates on a new loan. You can see where you stand by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com. You can also go here to learn how to improve your credit, should your scores be in rough shape.)

And soon-to-be students may be able to keep the cost of college down by applying for scholarships or grants, working while in school or attending community college for their first two years before transferring to a four-year institution.

More on Student Loans:

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Can I Take On My Wife’s Student Loans?

wife's student loans

Most consumers want to cut their student loan debt, and for good reason. High balances can make it harder to take out loans like a mortgage and save for retirement. But is there ever a good reason to put more student loan debt in your name? One commenter wonders if his credit score could benefit from taking on his wife’s loans: “I’ve been helping my wife pay off her student loans for six years,” he writes. “They are in her name only. If I add myself to the loans I’ve been paying off anyway, will that help my credit score?”

Can It Be Done?

Before we address how taking on debt may affect a person’s credit, it’s important to note that adding yourself to a spouse’s student loan may not be straightforward. “Student loans cannot be put in someone else’s name other than by refinancing them into a new loan,” student loan expert Mark Kantrowitz explained over email. Previously, married borrowers could consolidate federal loans, but Congress repealed this ability in 2006 due to issues that arose when couples divorced. In order to wind up on the loan, you’d probably have to refinance to a private consolidation loan or a non-education loan such as home equity. “If the new loan in the new borrower’s name pays off the old loans, it effectively changes the borrowers on the loan,” Kantrowitz says. “But it is also likely to change the terms of the loan, for better or worse.”

Consider Your Credit

Rates on any new loan depend largely on your credit score at the time of application. If your credit’s in good shape, you might be able to secure more affordable terms and conditions. But if it’s not, any loan you secure — and its payments — could become more expensive. Cost is an important factor to consider, since no loan will help your credit if you can’t make the payments on time.

Consolidating a student loan in your name may also hurt your credit. If you’re taking on a big debt without much credit on hand, the effect will likely be “more negative than positive” in the short-term, says Mike Sullivan, director of education for Take Charge America, a credit counseling service based in Phoenix. You’ll risk upsetting your credit utilization rate, a major factor in most credit scoring models. (The rule of thumb is to keep the amount of debt you owe below 30% and ideally 10% of your total available credit.) Plus, the loan application will generate a hard inquiry on your credit report, which may ding your score. You can get a better idea of how more debt might affect your credit by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free every month on Credit.com.

The Downside of Being Saddled With Student Loans

Weigh the pros and cons before consolidating debts with your spouse. Once your name’s on a loan, you’re liable for the debt and may not be able to get out of repaying it even if something goes wrong. (The same applies to co-signing loans with friends and family.) “In community property states, it is possible for one spouse to be obligated for the other spouse’s debts, since income and assets are treated as joint for the duration of the marriage,” Kantrowitz says. “But upon divorce, [student] debt is often treated as separate debt unless the ex-spouse co-signed the loans.”

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