You probably have a student loan or two if you’re anything like the average college graduate. In fact, about 65% of U.S. college graduates leave school with debt.
But is it enough to just pay your loans on time, or should you be doing more to keep an eye on where your money is going? While your loan servicer will keep track of your payments for you, it’s still a good idea to monitor your loans yourself. Here are a few reasons why:
How to keep track of your student loan payments
The first step is deciding how you want to keep track of your payments. This can mean setting up a budget and tracking your spending so you know where your money is going each month.
Make sure you find a system that’s easy and that works for you. You can use a simple Excel spreadsheet or pen and paper to track your payments, or there are a variety of personal finance apps that can help you stay on top of your loan payments and budget.
Working with multiple loan servicers
Working with several lenders also means making multiple payments every month, which can be difficult to track. If you don’t have a system in place, it can be easy to miss a payment or make a late payment. That’s why tracking your budget regularly and setting up auto payments can be helpful in paying down your student loan debt.
You may also want to consider student loan refinancing if you’re working with multiple loan servicers. Refinancing means you can consolidate your debt into one loan, which may offer a lower interest rate, depending on your payment history, income, and credit score. A single payment also means you’re less likely to miss a payment.
You can catch any errors
Your loan servicer is likely a large company, and sometimes mistakes happen. Keeping track of your payments means if you see an error on your account, you can quickly notify your servicer and get it corrected. This is better than realizing the mistake later and looking through months of bank statements trying to figure out if you made a payment or not.
You keep your credit score intact
If you don’t keep track of your payments, you might not realize you missed one until it’s too late. By then, you could be facing late fees and potential damage to your credit score. Keeping track of your payments will keep your credit score intact and ensure you have a good record of paying off debt on time.
You can stay on track
You’re less likely to get behind on your payments if you know exactly how much you need to pay each month. Plus, if you ever run into financial trouble and are unable to make a payment, you’ll be able to contact your servicer and make alternative arrangements before things get out of hand.
You’ll have a record of your payments
When it comes time to apply for student loan forgiveness or income-driven repayment plans, you’ll need to provide proof of your payment history. If you keep track of your payments yourself, you’ll have everything you need in one place.
You won’t miss a payment
Perhaps the main goal of keeping track of your payments is making sure you won’t miss one. If you choose to set up automatic payments, you can rest assured that your payment will be made on time every month. But if you’re not comfortable with that, you can always make your payment manually. Just be sure to set a reminder, so you don’t forget!