Student loan repayment doesn’t have to be a solitary and lonely existence. Sometimes, you can benefit from another’s input, support or experience.
While loan counselors, lawyers and financial professionals are typically good sources of advice, knowing when you should lean on a friend for repayment tips may be less obvious. Here are five do’s and don’ts to consider.
1. Don’t: You aren’t sure of your next step in repayment
A friend could help you accomplish basic repayment tasks, like learning how to use the National Student Loan Data System to locate your loans. Don’t rely on them, however, when you’re deciding on how to manage those loans.
Your friend might encourage you to follow in their footsteps if they’re also a borrower — but there are pitfalls of applying their solutions to your own repayment problems.
Student loan refinancing, for example, can deliver a host of rewards, possibly including a reduced interest rate and better customer service… for some borrowers. For others, however, refinancing could strip a safety net like income-driven repayment (IDR) or mandatory forbearance when they need it most.
To take the next step towards repayment, rely on your research — there’s a wealth of information about student loans online, as long as you rely on reputable sources.
For matters you feel are beyond your depth, ask someone who’s more equipped to help, like your lender’s customer support or a counselor working for a nonprofit like American Credit Counseling.
2. Do: You’re looking for a lender recommendation
Say you decide independently — or with the help of a knowledgeable professional — to refinance your student loans.
One of the best ways to vet banks, credit unions and online lenders is to check out their customer experience. If your friend is or was their customer, it’s a no-brainer to ask their opinion.
You might also read Trustpilot reviews or Better Business Bureau ratings, or communicate by phone or email with the lender itself. But a first-person experience is valuable, especially if it comes from a trusted friend.
Weigh your friend’s opinion as one factor in your decision. Before you award that friend a referral bonus, confirm that the lender would serve your needs, not just those of borrowers like your friend.
3. Do: You’re looking to become more budget-conscious
Trimming your expenses is a proven strategy to dedicate more of your income to your loan repayment. Calling on a friend to ask about their budgeting experience is another smart move.
If you’re trying to cut back, calling on a friend for budgeting advice could also help you communicate your desire to skip those expensive weekend hangouts. Perhaps you could ask this friend to join you for some free or cheap activities instead. That way, you could help each other keep pace with your payments.
4. Don’t: You need a handout to meet your monthly payment
If you’ve budgeted your expenses to death but still can’t meet your monthly loan payment, you might be desperate enough to ask a friend for a handout.
Borrowing money from friends and family is tricky and best to avoid as much as possible. You wouldn’t want to harm your relationship over a few dollars and cents owed to your lender.
Plus, borrowing from a friend to meet your next month’s dues is only a short-term solution, and one you might be tempted to repeat.
To avoid turning friends into creditors, brainstorm longer-term solutions. After combing through your budget, you could choose another repayment remedy. Here are some possible options:
- Deferment or forbearance: Temporarily pause your loan payments, allowing interest to accrue but also giving you time to get back on track.
- Income-driven repayment: Reduce your monthly dues by enrolling in an IDR plan (for federal loans), or talk to your lender about your options (for private loans).
- Student loan refinancing: Decrease your monthly payment by lengthening your loan term (in exchange for repaying more interest over time).
- Loan forgiveness: Seek out loan cancellation and repayment assistance programs, including from your employer, as well as the federal and local governments.
5. Do: You need emotional support (or someone to celebrate with)
Repaying student loans takes an emotional toll — there’s no doubt about that. Feeling like you have to manage on your own will only put more weight on your shoulders.
Instead, consider recruiting an accountability buddy, particularly if your friend is also a borrower in the midst of repayment. You could keep each other on track and celebrate small victories together along the way.
Even the most supportive bank, credit union or online lender won’t be as helpful during harder times, when you need some perspective or a shoulder to cry on. But at the end of the day, that’s what friends are for.
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