Tech-Based Strategies for Organizing Student Loan Payments

Pay For Student Loans Even If It Gets Complicated Fast. There are many reasons a borrower’s payment may be late. First off, a borrower can have many loans, each of which may have many interest rates, be due on different dates and be serviced by different companies. Secondly, a borrower has to pay for rent, utilities, insurance and all the other things that a borrower pays to. All of this can cause a borrower to have to rush to get all of his or her payments in on time. This can cause him or her to miss a payment, as he or she can get very busy paying for other things that the borrower has to pay for.

While technology cannot reduce your student loan balance for you, it can help to organize and make sense of your payments. By tracking your income and expenses, setting up reminders for payments, and creating online dashboards for your loans, technology can make your life as a borrower much easier.

In short, having more apps does not automatically mean that you are better organized. What is more important is that you have a simple system that you can check on a regular basis.

Start by Creating One Clear View of Every Loan

The first step to making payments on time and making smart financial decisions is to gather all of the information about your current loans in one place.

When organizing your payments, record the current balance, interest rate, minimum payment, due date, loan type, and servicer for each of your loans. This can be done in a spreadsheet, online in a secure budgeting site, or using a personal finance app on your phone.

Having a central record makes it easier to answer basic questions:

• How much is owed in total?
• Which loan has the highest interest rate?
• When is each payment due?
• Are the loans federal, private, or a mix of both?
• Which payments are fixed, and which could change?

Lenders offer a wide array of repayment options. Without first reviewing the repayment options of each of a borrower’s current loans, a borrower could find himself worse off by choosing the wrong repayment option for his current loans. This may occur even when a borrower chooses the repayment option that pays off his current loans with the smallest outstanding principal balance first.

Instead, a digital dashboard should provide aid in the monthly planning for a borrower, not to replace the official loan documents and/or account information online.

Use Calendar Alerts Before Payments Are Due

One of the simplest technologies to prevent problems for a borrower is payment reminders.

Rather than simply setting a reminder for the day of the loan payment, borrowers would benefit from a number of alerts over the course of 10 days or so leading up to the payment due date. This will give the borrower ample time to check on the status of their account and move funds as necessary before the payment is withdrawn from their account.

The borrower will have time to check the account to make sure there is enough money in it to make the payment, and then transfer the funds to make the payment if necessary. This also helps to prevent a last minute problem when finding out there is not enough money in the account.

Those with irregular income can also benefit from using Calendar reminders. Such individuals include freelancers, those paid on an hourly basis, and employees who work on a seasonal basis. Their income does not arrive in their bank account on the same date each month. A reminder ten days prior to a payment being due allows time for other expenses to be reduced in order to make the required loan repayment.

Specific Alerts Are Better Than General Reminders. Instead of setting a reminder for ‘loan payment’ (which would probably get overlooked in the deluge of reminders and messages), set a reminder for ‘Confirm $275 is available for student loan payment’.

Automate Payments, but Continue Checking the Account

Automating your payments helps ensure that you are making your payments on time, and can help to prevent late payments and negative marks on your credit report.

This is convenient, but automation should not be treated as a complete replacement for oversight.

As with anything related to money, when one sets up the automated payment, one has to keep track of whether the payment went through or not. Even more, if one is paying more than the minimum payment (for example, to pay off the principal of the loan as fast as possible), one would want to make sure that the extra payment was applied correctly.

These systems can also be set up to check the account a few days after the payment has been automatically made. For example, the payment can be automatically set up to be paid each month and then 2-3 days later there is another calendar alert set up to review the transaction and to verify that the payment had been applied properly.

It’s also important to have a bit of a buffer in the payment account, as even a few dollars short when the payment is withdrawn could result in a returned payment, along with associated bank fees, and a late payment.

It is also important to note that Technology should reduce work and raise awareness.

Compare Different Payment Scenarios

Borrowers know the minimum payment for their loans, but they have no idea how much paying an extra amount of money each month can do to cut down the repayment period and the interest they have to pay.

Digital planning tools can help answer that question.

A student loan calculator can also compare monthly payments, estimated interest payments and help estimate when you will pay off your student loans by comparing additional monthly payments to your minimum payment amount.

This comparison will make the borrower more aware of his or her repayment goals, and help him or her to realize how much extra money he or she needs to pay each month in order to pay off the loan on time.

Even with estimates, though, results will vary depending on the following factors: interest rates, the date of payment, the terms of your loans, and whether or not your extra payments were applied correctly.

How can additional payments be used in the borrower’s broader financial circumstances? Will they have sufficient funds for emergencies, such as unexpected car repairs, or for other essential payments?

Connect Loan Payments to a Monthly Budget

Student loan payments are not separate from the rest of the borrower’s finances and should be managed within the context of their overall financial situation.

Connect Loan Payments to a Monthly Budget. A budgeting app allows the borrower to see how their student loan payments fit in with their monthly expenses for items such as housing, food, transport, savings and recreational activities. They can also see the impact of making additional payments on their loans, and how this will affect their finances.

The better apps for budgeting even categorize the user’s transactions. Many of the apps for budgeting allow the user to create certain limits, save for future dates, and even set goals for savings. So, the user could enter their transactions for the month and then track the amount that they spent on certain things. They can even go back and re-categorize past transactions. So, even a simple spreadsheet could work well for someone tracking their budget. As long as they keep updating it.

In tracking your money, there is no need to account for every single cent. Rather, try to establish patterns in your spending and monitor your overall progress.

As another example, in a person’s budget they may notice that some of the charges for their subscription services are actually taking money from their debt payments. A person may be surprised to see how much is being spent for services that they hardly even use. On the other hand, a borrower may realize that some of their more irregular expenses have forced them to rely on credit for unexpected bills, like an annual car insurance payment.

Keep the System Simple Enough to Maintain

The best system for repaying a loan is not necessarily the most complex to use.

The borrower only needs a simple system that he or she is able to keep up. This might be a simple spreadsheet to monitor repayment, calendar alerts for payments, and online payments. However, some borrowers may prefer more sophisticated tracking of their repayments. Some may like a budgeting app which, for example, monitors their spending and provides a detailed report.

Either approach can work.

So yes, consistency is what is required. That will mean checking the loan details from time to time. Making sure that all the alerts are up to date. Checking that the payments are being taken from the correct account and are being paid on time.