It’s always exciting news to learn you won’t have to pay your Student Loans.  As you should know, your Department of Education Federal Student loan payments and interest have been postponed until January of 2021 (If you don’t have Department of Education loans you need to call me right away so you can get zero payments and interest too)!!!

What you may not know is what you should be doing in the meantime… Depending on your situation there are different steps you should be taking. I will break each one down and you can determine which steps fit your needs.

       Step 1: Pay down interest before capitalization

Interest accrued prior to the CARES act and it still has to be paid first before your payments go directly towards your principal. If you have stopped paying altogether the interest will be added to your principal balance in January when payments resume. To avoid the capitalization of interest I suggest you contact your servicer or view your account online to determine how much interest you owe and work to pay it off before January.  This will help to ensure you keep your costs as low as possible when you do begin accruing interest and making payments again.

       Step 2: Fix Your Credit

Once you have taken care of the interest owed on your student loans, it’s important to concentrate on fixing your credit and/or paying off high-interest debt loans since you aren’t required to make a student loan payment. Having good credit is imperative for your long-term financial success. My company has been quite successful in helping people who are serious about gaining good credit. Check out a review from a happy client: 

            Chris Brzezinski

3 weeks ago
Positive: Professionalism, Responsiveness, Value

Gen is a rock star! She has helped me get my credit score out of the dumps (it’s gone up over 100 points in the last year!) and has taken care of doing all dirty work involved with getting my loans back in good standing! I was able to open a business and I wouldn’t have been able to cover startup costs if it wasn’t for her.

If you would like results like Chris, please set up a Call with me to get started. 

      Step 3: Make principal payments to take advantage of zero interest

Don’t have any credit issues or outstanding debt? Great! You should be making principal payments on your student loan to take advantage of the zero interest accruing. Why? Well, as you pay down your principal balance you have less and less interest that accrues each month. The more principal balance you pay down the faster you pay off your debt. Here is an example:

Person A: Has a $10,000 loan with $100 of interest accruing per month. They make a $120 standard payment. $100 of the payment goes to the interest and $20 is subtracted from their balance. They now owe $9,980. 

Person B: Has a $10,000 loan with $100 of interest accruing per month. They make a principal payment of $100 and pay the standard $120 payment. Because they made the extra principal payment they no longer accrued $100 in interest. Instead, their interest is $80 (For simplicity sake). So now the payment of $120 goes further with $40 subtracting from their principal giving them a lower balance of $9,860. Then the following month the interest that accrues is much lower and each month thereafter. 

The Moral of the Story: Principal payments are the key to paying your debt down faster so if you can afford to do so and you don’t have other higher interest debt out there, I strongly suggest you take advantage of this current zero interest climate. 

Still not sure what you should do?  Don’t hesitate to contact me at the number below or schedule a call.  You can also check out the website for more information at http://Studentloanmanagement.info.

Time to Take Back Control of your debt!
Dr. Genevieve Dobson, DBA
Degrees of Success
(813) 528-1102


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