Do You Make These 6 Mistakes With Your Student Loan Payments?

By Julissa Treviño Updated on May 6, 2019

When I was repaying my student loan debt, I made a lot of mistakes. Between making late payments and avoiding calling the loan provider when I was struggling, some of them seriously impacted my ability to get ahead on my loans and pay them down faster. It felt like a vicious cycle.

Most of these big mistakes are easy to avoid, and they can go a long way to making repayment easier and saving money in the process.


Are you accidentally making some of the same mistakes I made? Find out what they are and how to avoid them.

Mistake #1: Paying late

Making a late payment is a surefire way to make it harder for you to pay your loans.

Most student loan lenders charge a late fee—and late fees must be paid before any interest or principal is paid on your balance. But late payments also impact your creditworthiness in the long term.

Your loan becomes delinquent the day after you miss a payment, and delinquency is typically reported to the major credit bureaus after a certain amount of days. If reported, the delinquency is a bad mark on your credit report.

Instead of risking a late payment, sign up for an automatic payment with your lender.

Mistake #2: Paying only the minimum

If you’re only paying the minimum on your student loans, it will take you a lot longer to pay your debt. That’s because monthly payments first go toward paying late fees, then interest, then your principal loan amount.

In order to pay off a loan faster, you need to pay a little extra. The more you pay each month, the less interest is accrued and the quicker you chip away at your principal.

Even $20 extra will help. If that’s too much, pay $5 extra. Every dollar is one dollar less on your loan principal—which means that's one dollar less you'll be charged interest on. 

Mistake #3: Not calling the company when you're struggling to make payments

When I was in debt and struggling to pay my bills, I avoided calling my student loan lender at all costs.

Why? Because it was tough admitting that I was having a hard time and I didn’t want to make any promises about payments that I couldn’t keep.

But the truth is that calling your lender and going through your options for repayment is the best thing you can do. You may be able to lower your monthly payment or apply for deferment, which postpones your payments.

Lenders want to help you repay your debt. Remember, they’re not gaining anything from your loan delinquency.

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Mistake #4: Taking a forbearance without exploring other options

Another option a lender can offer is forbearance, which allows you to temporarily stop making your federal student loan payments.

This may give you time to get back on your feet. But unlike deferment, however, you are responsible for all interest that accrues during forbearance.

This means your loan balance can increase quickly. For that reason, it’s not the best option to take. Instead, ask your lender if you qualify for a lower monthly payment.

Mistake #5: Not refinancing to a lower interest rate

I made the mistake of not refinancing my loans when I should have. Honestly, I didn’t really know it was an option.

Refinancing is when you pay off a pre-existing loan by taking out a new loan with new terms. If you’re stuck with a high interest rate on a student loan, refinancing can lower your monthly payment and interest rate.

People who refinance save an average of $259 a month with current refinance rates are as low as 2.74%.

Mistake #6: Stopping payments too early when refinancing

If you choose to apply for refinancing, don’t stop paying on your old loan until the new one is up and running.

You should get approval from your new lender with updated terms and ensure that your balance on your old loan is now $0. The refinancing process can take several weeks. If you skip a payment, you risk the chance of delinquency and a ding on your credit score (see Mistake #1).

Thinking of how to fix, or avoid, these mistakes? Start by considering whether refinancing your student loans is right for you and how much you could save.

Published in: Refinance

About the Author
Julissa Treviño

Julissa Treviño is a writer and journalist based in Texas. Her work has appeared in BBC Future, CityLab, Columbia Journalism Review, The Dallas Morning News, Racked, Teen Vogue and other publications. She enjoys traveling, playing with makeup, biking and trying new food. Follow her @JulissaTrevino. Read more by Julissa Treviño