Why Completing FAFSA Early Is Critical

May 1, 2019

The process of completing the FAFSA application might be something you’ve complained about. If you haven’t complained about it yourself, it’s likely you’ve heard others mention as not their favorite thing to do on a Saturday night. Though difficult, it is a crucial step for college attendance each year. Sorry—it’s unavoidable! Doing your FAFSA early can be a huge benefit, it makes it a little easier to get motivated and start the process as soon as you can. Why is it so crucial to complete your FAFSA early each year? Here are the reasons why completing the FAFSA early each year are imperative to your financial future.

An early application means a better chance at more money.

If you do your FAFSA early, you’ll have a better chance at more federal financial aid or school financial aid. The FAFSA application can be submitted for the next year of college starting October 1. That sounds early, but the sooner you get it in the better your chances for getting financial aid. For example, some colleges award their aid on a first-come, first-serve basis. If you wait too long, the school’s available financial aid may have been awarded to other students that did the FAFSA sooner. The same applies for federal financial aid. Only so many funds are available, and the institutions can’t wait until the last minute to select who gets awarded the aid. They often dole out aid earlier in the window. Meaning the earlier your application is submitted the better chance you will have at receiving financial aid.

Get your Student Aid Report faster.

If you file closer to that October 1 deadline, your Student Aid Report will arrive sooner. This gives you a better idea of where you stand for aid awards faster. The faster you have that report, the sooner you can start planning for how you’ll pay for the rest of your upcoming academic year. Having more time to apply for loans or look for other forms of aid will take the weight off of your shoulders!

Skip the stress of procrastinating.

Get it out of the way! There are so many things that you have to do to prep each semester. From registering for classes to picking up housewares and finding a roommate to getting your parking permit. Preparing for the upcoming academic year can usually mean a long to-do list. Plus, you will be wrapping up the previous semester. Do you really want to be worrying about FAFSA when you’re trying to study for exams? Not a chance! You don’t want to be overwhelmed with the amount of work it takes to complete the FAFSA. Be wise and get it out of the way and clear yourself up for focusing on other tasks.

These deadlines are real.

There’s not a lot of leniency if you don’t get your FAFSA done in time. Those deadlines are serious, and even being a little late could mean that you’re not eligible at all. Yikes! You don’t want to miss out on aid that could have saved you money on student loans just because you flaked on the application process. Plan ahead and get it done.

Other FAFSA Tips

Even if you don’t think you’ll qualify for aid, it’s still a good idea to complete the application. Some schools have increased their income levels for aid. The application may be required to qualify for other types of scholarships at some colleges.
You generally have until the end of June to file, but some states and schools have earlier deadlines. Know what those deadlines are so that you’re not kicking yourself later!
Does your school use the CSS Profile? That’s an additional application required by 400 major colleges and it’s just as important as FAFSA. Check with your financial aid office to verify.
When FAFSA changed a few years ago from the January 1 start date to October 1, this also changed the tax information you need to submit. You don’t have to wait until January 1 to file because you use the previous tax year’s information. For example, taxes from 2018 won’t be used until October 1, 2019, which will apply to the 2020-2021 school year.

If you have any questions about FAFSA or any other aspect of financial aid, don’t wait to talk to an advisor or someone in your school’s financial aid office. They specialize in these topics and are there to help make sure you get as much aid as you deserve. All you have to do is listen, be on the ball, and get all of your paperwork in order to make this happen!

What You Need to Know About Scholarships

Actions to Take

Here are a few actions you should take before your grace period ends to ensure you are prepared.

Determine Your Debts

First, it’s important to understand the types of student loans you have. For example, do you have private or federal loans? If you have federal student loans, you’ll need to determine whether you have subsidized or unsubsidized loans. Subsidized loans mean the U.S. Department of Education will pay the interest on the loan during the grace period for most loans. (Note: If you have a direct subsidized loan that was disbursed between July 1, 2012, and July 1, 2014, you are responsible for the interest during the grace period.) If you have a Direct Unsubsidized loan you will always be responsible for the interest, even the interest accruing during the grace period. This means that if you don’t need the grace period you may want to think about at least paying the interest on the loan. Be sure to take stock of your other debts, such as a car loan or credit card payments, and their minimum payments.

Make a Budget

Determine a budget that includes your new student loan payment and all other debt payments. Once you determine your budget, start following it before your grace period ends. The money budgeted for your student loan can be put aside to use as an emergency fund. Or use the money you saved during the grace period to make a principal-only payment to get ahead on your repayment.

Set Up Auto-Pay

Another great action to take during your grace period is setting up auto-pay through your loan servicer. Setting up auto-pay will ensure your student loan payment is always made on time. Another great benefit of using the auto-pay feature is that federal student loans are given a 0.25% interest rate reduction. Some private student loan lenders also provide a discount for auto-pay so check with your lender if any discount is available.

Establish a Debt Repayment Plan

Your grace period is a great time to establish a student loan debt repayment plan. A debt repayment plan will help you decide exactly how you will pay off your debts. There are two main types of student loan debt repayment plans, the snowball method, and the avalanche method. You have to decide which method would work better for your financial situation and motivation. Either method will be helpful if you have multiple student loans or other debts to pay off. Once you decide on your method, you will know how to allocate any extra money you have in your budget for debt repayment. When it comes time for your grace period to end you will be more than ready to start paying down your loans efficiently!

Research Repayment Options

If you have multiple student loans you can pay each loan, keeping track of each loan individually and their due dates.
Another option is to consolidate your federal loans into one loan. The average interest rate of the consolidated loans becomes the fixed interest rate on the new consolidated loan. This is consolidating your federal loans into a Direct Consolidation Loan through the U.S. Department of Education.
Refinance student loans. Once you start getting your finances in order you may realize your student loan payment is not going to fit in your budget or has a much higher interest rate then what is available now. That’s where refinancing your student loans can help. Refinancing your student loans means you will borrow a new private student loan to pay off any previous student loans (including federal and other private student loans). Refinancing can save you money because interest rates can be much lower than for federal loans. A lower interest rate means you are saving money in interest costs monthly and over the life of the loan. To find out how much you could save use our Student Loan Refinance Calculator.*

Learn About Borrower Protections and Programs

When you have federal student loans you are provided benefits that are not always provided by private student loan lenders. The grace period of your loans is a good time to find out about any federal borrower protections you may want to use in the future, such as deferment and forbearance for your loans. Also, if you work for a non-profit or government agency, your loans may qualify for forgiveness under the Public Service Loan Forgiveness (PSLF) program. During the grace period, it is helpful to learn about the requirements for the program so when your payments begin you can be sure they qualify under the specific rules of the program.

Learn About the Repayment Plans

If you are shocked by what your monthly payment will be on the standard repayment plan, check into the other student loan repayment plans provided for by the U.S. Department of Education. Certain loans are eligible for an Income-Driven Repayment Plan, where your payment will be based on your income. Or you can elect to have your loans on the Graduated Repayment Plan that will extend your loan term to provide for a smaller monthly payment. However, keep in mind that you will end up paying more interest over the loan term.

The Bottom Line

Taking these actions will help you be prepared for the end of your grace period. You are already a step ahead by thinking about this now. This preparation will start you off on a bright financial future knocking out your student loans. Good luck!

*Subject to credit approval. Terms and conditions apply. Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Check out these 8 apps that can help you pay off your student loans

2020-08-20

8 Apps That Can Help You Pay Off Your Student Loans Faster

Over the past few decades, student loan debt has skyrocketed. That’s no secret. Fortunately, at the same time, hundreds of tools have been created to help make paying off student debt easier and faster. Many of them can be accessed entirely through your phone, turning student loan relief into a mobile, accessible service. We’ve compiled a list of several apps that can help you pay off your student loans. Take a look:

Mint

There are dozens of fantastic budgeting apps, and Mint is among the best. It allows you to track and plan for expenses by providing easy access to statistics and other information about your spending. How does this pertain to student loans? The answer is simple. Proper budgeting and paying off student loans go hand in hand. Being able to set aside portions of your income every month for your student loan payments is key to successful financial management. Plus, by looking at your budget and determining where you can cut spending, you’ll be able to put more money toward your student loan payments, allowing you to become debt-free faster.

EveryDollar

Created by personal finance guru Dave Ramsey and his team, EveryDollar is another great budgeting application. Designed to be simple and efficient, EveryDollar is a very effective budgeting tool. As with Mint, maintaining a budget is key to every quick student loan payoff. EveryDollar is best used to identify where you can spend less money in order to reallocate that money to your student loan payments, and with all the information laid out in front of you, it’s hard not to see where you can make some improvements.

ChangEd

Built by two individuals who struggled to pay off their student loans, ChangEd is an app that links to your credit and debit cards. When you make a purchase with those cards, ChangEd rounds up to the nearest dollar, taking that change and sending it straight to your student loan provider when you reach a minimum threshold. While seemingly a small amount, this extra change adds up. It’s more money going directly to your student loan payments. Who would turn that down?

Qoins

Qoins functions very similarly to ChangEd. You connect your credit and debit cards, and after every purchase, Qoins will round up and send that money to your student loan provider. The difference between Qoins and ChangEd: there’s no minimum threshold to reach, all the extra money goes straight to your loan provider. That said, it charges a higher monthly fee than ChangEd to do this.

Undebt.it

Undebt.it is a handy app that allows you to track all your debt in one place, then it provides a plan to help you pay it off in the most efficient way possible. One way is the ever-popular debt snowball method, where you pay off all of your smallest loans first, but you can also choose from a variety of repayment strategies. You can choose whichever works best for you. One highlight is the app's ability to show what a difference an extra payment makes.

Debt Payoff Assistant

Debt Payoff Assistant is a debt tracker focused mostly on the debt snowball method. Input each of your debts, student debt especially, and a unique debt repayment plan is generated. The app offers great utility, with several built-in calculators, as well as the ability to view a payoff schedule, estimated payoff dates and more.

Givling

Givling is a quirky way to deal with student debt faster. Twice a day, Givling hosts a trivia contest via their app. Winners earn a cash prize, and as one plays more, they help to crowdfund future giveaways and prizes. So if you’re good at trivia, this could be your chance to tackle some student debt. If you aren’t good, you’re still helping to pay off someone else's student loans. That said, the odds are against you winning big through Givling, and it’s definitely better to consider it a fun diversion rather than a serious solution for dealing with student debt.

Google Opinion Rewards

A little like a side hustle, Google Opinion Rewards and other survey-for-pay websites are a different way to deal with student debt. When you complete a survey, you will receive a very small reward, but the rewards add up over time. It’s a great way to fill short periods with nothing to do. You can easily earn a little pocket change in a waiting room or while waiting for the tea kettle to boil. Put it towards your student loans, and you’ll be well on your way! There are dozens more apps that can help you pay off your student loans, and undoubtedly there will be even more in the coming years. It’s never been easier to get organized and tackle your student loans head on, and with these apps, we hope you’ll get it done in style. If the apps don’t cut it, it may be time to consider student loan refinancing, check it out here.

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

2020-08-18

The Benefits of Making Consistent Student Loan Payments

If you have student loans and consistently make your monthly payment, congratulations! You know how beneficial that can be for your financial health. However, if you are in the habit of skipping student loan payments because you think it won’t affect you, you need to keep reading. Although missing a student loan payment isn’t quite as detrimental as missing a car or mortgage payment, missing student loan payments can have a strong negative impact on your financial future. Still need convincing? Here are four great reasons to continue making consistent student loan payments, and what to do if you’re struggling to make your payments.

Benefits of Consistent Student Loan Payments

Whether you have federal student loans or private student loans, there are many benefits to making consistent payments on time. When you make consistent student loan payments, you're more likely to:

Have a Better Credit Score

Your credit score can affect many facets of your life. For example, if you want to buy a car, rent a home or buy a home, your credit score will be reviewed before you’re approved. One of the most important factors in determining a person’s credit score is their payment history. The payment history shows if you miss a payment, and missed payments remain on your credit history for 7 years. So any missed student loan payments could take a significant toll on your credit score, while making consistent payments can help improve your score. A better credit score can:

Qualify for a Mortgage, Car Loan or Better Interest Rate

When you apply for a loan, sometimes lenders require a minimum credit score to approve the loan. Even after you are approved for a loan, a higher credit score means a better chance of receiving a lower interest rate. A lower interest rate equates to paying less interest over the life of the loan, saving you money!

Qualify for Refinancing

Whether you want to refinance your student loans or your mortgage, having a good credit score can help you qualify for refinancing and a better interest rate.

Qualify for Better Credit Card Limits and Rates

Having a strong credit score and good credit history shows lenders you are responsible with credit and making payments. Therefore, when you apply for a credit card, you are more likely to receive a higher credit limit and lower interest rate.

Qualify for Rental Housing

Even if you think you will not be taking out any other loans, if you are trying to rent a house or apartment, some locations require a credit report. A low credit score or negative credit history can prevent you from qualifying for certain housing.

Save on Interest

When you make consistent payments on your student loans, you will save on interest costs. Interest compounds daily, meaning more interest is added to your loan each day. Some interest accrues based on the principal of the loan (the amount you borrowed), while other loans interest compound based on the total outstanding balance. Therefore, consistently making payments, and making extra payments when you can, will save you from paying more interest.

Avoid Late Fees

When you make consistent payments by your due date, you will avoid having to pay any late fees. Saving yourself money that could be put towards your loans!

Pay Loans Off Faster

One of the best benefits of making consistent payments is that you can pay your student loans off faster. For example: if you are paid bi-weekly and decide to make half your monthly payment each time, you will ultimately make one extra payment per year. Here is how it works: If you owe $50,000 at 7% interest and have a 20 year loan term, your payment would be approximately $387.65 per month. If this is paid consistently monthly you would end up paying over $43,000 in interest over the 20 years. However, if you divide your payment in half to $193.82 and pay that every two weeks you would pay the loan off 3 years sooner and save over $7,000 in interest.

What to Do If You Can’t Make Consistent Payments

If you are worried because you can’t make the payments by your due date, here are some options to try:

Switch to a Different Repayment Plan

If you have federal student loans, look into whether a different repayment plan would help make your payment more manageable. Although switching to a longer loan term or income-driven repayment plan will increase the amount of interest you owe in the long term, it’s best to have an affordable payment you can make so you do not default on your loan.

Try Refinancing Your Student Loans

Refinancing your student loans is an excellent way to make your loans more affordable and save on interest costs. Refinancing is taking out a new loan to pay off your old student loans. When you apply for a new loan you may qualify for a new lower interest rate, which reduces the amount you’ll pay over the life of the loan. A lower interest rate can also reduce your required monthly payment, making it more budget-friendly. After you refinance, you may also see that it is easier to make more consistent payments, such as bi-weekly, to pay your loan off faster. Use our Student Loan Refinance Calculator to see how much you can save with refinancing.* When you are paying off any type of debt, it’s always best to make consistent payments on time. This will not only keep you in the habit of making payments but will save you money in the long run. Although paying off student loans may seem like a marathon at times, you will reach the end! Keep going because it will literally pay off!