Student loans can add up quickly. Making on-time payments every month can feel like an impossible task as you’re busy balancing other responsibilities like work, extracurricular activities, and social obligations.
Luckily, there are ways to simplify your life by setting up your student loan payments to be automatically deducted from your checking account. By automating your student loan payments, you save time and reduce the possibility of late fees and penalties. Here are six reasons why you should set up your student loan on autopay.
Eliminate Late Fees
Late fees are no fun and can cost you a lot of money when it comes to repaying your student loans. Setting up an automatic payment through your bank is a quick, easy way to eliminate those late payments in their tracks. I set up my monthly auto-payments so that they come out ten days before my due date to make sure I never forget again.
Keep Payment Information Private
The Bureau of Consumer Financial Protection recommends that you don’t share your account information with anyone else. You should never give personal account numbers or other sensitive information to companies offering student loan payment services. If you get a call, check your credit card bill for unauthorized charges from someone claiming to be from your student loan company. If you see any unauthorized charges, dispute them with your bank and contact your student loan refinancing servicer directly.
Earn Interest While in School
If you’re lucky enough to have a job while in school, one of your primary goals should be to save as much money as possible. While it may not seem like a lot at first, accumulating savings during school can help reduce your student loan debt by hundreds of dollars when you graduate.
Payoff Faster with Lower Payments
Some borrowers choose to pay off their student loans in full. However, setting up autopay is a better option for most people. If you’re currently paying more than 10% of your take-home pay towards your student loans, it’s smart to talk with a lender about lowering your monthly payments.
Avoid Defaulting When Notified
Borrowers can expect to be current on your student loan payments. But there are several reasons why a payment could fail, such as an insufficient balance in your checking account or problems with your loan servicer. By setting up autopay for your student loans, you ensure that these sorts of issues won’t derail your repayment. Auto-pay is also convenient since it can be set up to go through each month automatically regardless of whether you have money in your account at that time or not.
Manage Multiple Loans Simultaneously
If you have more than one student loan, set up an automatic debit (auto-pay) to make paying your bills easier. This will help you avoid late fees and maximize how much money goes toward the principal each month. If you have multiple loans, always try to pay them off in order of highest interest rate first to save money on interest payments in time.
According to Lantern by SoFi, “The actual loan terms you receive, including APR, will depend on the lender you select, their underwriting criteria, and your personal financial factors.” The good news is that several lenders are willing to give you a student loan with an interest rate as low as 2.625%. So make sure to shop around for a student loan with an interest rate that works for you.