08 Jul Three Questions to Ask Your Borrowers as They Prepare for Repayment

By Chansone Durden, TG Account Executive Team Manager

During the school year, probably not an hour goes by that you don’t find yourself talking with a student about financial aid. But did you know that one of the most important times to connect with your borrowers comes after they leave school? That’s right — just as borrowers finish up their grace period and prepare for repayment offers you a prime opportunity for educating borrowers about their repayment options. In fact, the talk you have with them at this time could make all the difference in terms of their repayment success. Here’s why.

Your borrowers will turn to your school most readily out of all those who work with loans, including servicers, lenders, and guarantors. They’re also more likely to act on repayment information when it comes from you, given your long-standing relationship. Take advantage of this rapport. As the grace period winds up, pose some questions to your borrowers to get them thinking about their loans, especially if repayment may be an issue. Here’s what to ask:

• Do you know how much you owe and who to pay? In the confusion of graduating, moving, and finding a job, students can forget about student loan repayment. They can also lose correspondence from their servicers. In either case, there’s a simple solution: the National Student Loan Data System (NSLDS) website. NSLDS offers a borrower a complete list of his or her loans, loan servicers, and loan servicer contact information. And NSLDS is available anytime from a PC or mobile device with Internet connection. All the borrower has to do is log in to the NSLDS student portal using the personal identification number, or PIN, that he or she used to complete the Free Application for Federal Student Aid. NSLDS can be especially useful for borrowers with loans split between multiple servicers.

• Can you make payments? In a slowly recovering economy, your borrowers may have problems finding a job. If they can’t find employment or make their bills, they could panic and ignore loan repayment entirely. Remind them of their obligation and offer help. Certainly, there’s no shame if repayment is problematic, and no consequences if borrowers take the necessary steps to manage the situation. For example, they could enter into deferment or choose a repayment plan that offers very low initial payments based debt and loan amount. Remind them that delinquency and default bring consequences, including damaged credit and diminished job prospects. Before hiring someone, many companies consider the person’s credit report.

• Is your repayment plan the right one for you? Often times, the secret to paying off student debt comes down to the repayment plan. Choosing a plan that meets the borrower’s financial needs can make all the difference over the long haul, especially if the borrower hits a tough financial spot. Luckily, there are variety of plans to choose from, several based on income and debt levels. For example, borrowers may do well to consider Income-Based Repayment, which allows zero or near-zero payments for excessively high debt and low pay. Also applying for these plans — specifically IBR, Pay As You Earn, and Income-contingent repayment — can be relatively simple, if the borrower applies online through the federal electronic request form.