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It’s no secret that many Americans are struggling under the weight of their student loan debt. Twenty-one percent of student loan borrowers with less than $ 15,000 in outstanding debt was overdue on their payments in 2021, while 17% with $ 15,000 or more were overdue, according to the Federal Reserve.
Student loans also come with a lot of paperwork, and one important document you may need to apply for is a student loan repayment letter. Learn more about what a student loan repayment letter is, when you might need it, why it’s important, as well as ways to pay off your student loan debt faster.
You can use Credible to compare student loan refinance rates from various lenders within minutes.
What is a student loan repayment letter?
A student loan repayment letter – also known as a “repayment verification statement” or “repayment statement” – is a statement from your student loan lender that describes your repayment amount, your bill obligation. monthly and other information about your account. A student loan repayment letter is only valid for a specified period of time after the lender issues it. You can get a student loan repayment letter, whether you have private student loans or federal loans, or a combination of the two.
A student loan repayment letter doesn’t prove that you’ve paid off a loan in full – instead, it shows how much you still have to pay to fully repay your student loan debt. This amount differs from your current balance because your balance does not include the interest you owe. A student loan repayment letter can also include any fees you haven’t paid yet.
Keep in mind that a repayment statement is not the same as your monthly statement, and if you need it, you will need to request it from your loan officer.
What information is included in a student loan repayment letter?
Typically, student loan repayment letters include:
- 10-day refund amount – Some repairers may choose a refund amount of 15 or 30 days instead.
- Account number – If you have multiple account numbers, these will also be listed.
- Loan details – All individual loans and their repayment amounts should be listed.
- Refund instructions – The duty officer will need to include detailed instructions on how to repay the loan.
When do i need a student loan repayment letter?
Now that you know what a student loan repayment letter is, here’s a closer look at when you might need it.
If you are refinancing your student loans
When you refinance a student loan, you will need to provide your student loan repayment letter to your new lender.
With Credible, you can compare student loan refinance rates in minutes without any effect on your credit score.
If you repay your student loans
When planning to pay off your student loans, a student loan repayment letter can help you create a repayment plan and budget because it gives a clearer picture of what you really owe. Since interest accumulates daily, you won’t get the full picture by looking at your current balance, which does not include all interest or charges accrued up to the repayment date.
If you get a mortgage
When you apply for a mortgage, the less debt you have, the better. Your student loan debt affects your debt-to-income ratio, which lenders look at when considering a mortgage. Your DTI may also affect the mortgage rate and terms offered to you. Use your student loan repayment letter to create a debt repayment plan so that you have less debt when you apply for a mortgage.
How do I get a student loan repayment letter?
If you need a student loan repayment letter, the process for getting is pretty straightforward.
To obtain a student loan repayment letter, you must contact your student loan manager. If you have multiple student loan officers, you will need to identify them and contact them individually to request a letter from each loan officer.
Ways to Pay Off Your Student Loans Faster
Once you have your student loan repayment letters in hand and know exactly how much you owe on your student loans, you can sit down and create a plan to pay off your student loans faster.
- Consider refinancing and consolidating. In some situations, refinancing or consolidating student loans can make it easier to pay off your student loans faster by lowering your interest rate or streamlining your loans into one monthly payment (which happens when you consolidate). It is important to review the terms of the new loan before refinancing or consolidating, as a better interest rate can come with a longer loan term. You will also lose valuable federal protections (like forgiveness or loan forgiveness) when you refinance or consolidate federal student loans into private loans. Do your research carefully.
- Make student loan payments every two weeks. Pay half of your monthly student loan payment every two weeks instead of paying the full amount once a month. This equates to making an additional payment per year, which saves you on interest and pays off your loan faster.
- Sign up for automatic payments. Many lenders give you a discount on the interest rate when you sign up for automatic payments. Not only will this help you never miss a payment, a lower interest rate will allow you to spend more money on your principal.
- Pay extra for your capital. Making additional payments on your principal balance will help you avoid paying more interest, as long as you tell your lender that you want the additional loan payments to be applied to principal instead of interest.
- Eliminate one loan at a time. To stay motivated while paying off student loan debt, it can be helpful to focus on paying off one loan at a time. You would still make minimum payments on all of your student loans, but you would focus on additional payments for a specific loan. Once you’ve paid off a loan, you can use your monthly savings to help pay off your other loans faster.
If you are ready to refinance, Credible allows you to easily compare student loan refinance rates in one place.