I had a really scary and eye opening experience with my loan this past week and I decided that someone else might need to hear about it.
Now, I'm one of those people who checks their loan account pretty regularly just to see what kind of change the interest is adding to it. So, I knew just about what the balance was supposed to be. I also knew that with my next payment I was going to get it under $17000 which every $1000 I knock off of it is a big step in my book. Before I tell you what happened this past Thursday, I'll give you some background on how I pay my loan off.
When I graduated from State, my loan balance was a whopping $22000. I know that's not as much as some people have and I also know that to some people that's pocket change. But, to me that number was a big deal. We've already been over the whole I was supposed to go have a job at Disney thing here. We've also been over the fact that I didn't go here. The loan has a 6-month grace period following graduation which was an absolute godsend considering I had no job and practically no money. I got the job at Holy Angels in October, and was supposed to start paying on my loan in December. Well, what I didn't know about it was during that 6 month grace period it was still accruing about $100 in interest every month. That's $600 more than the day I graduated. Talk about crazyyyy.
My minimum payment was $268.90 a month and it would take me exactly 10 years to get it paid off at that rate. And I'd pay more than half of the balance in interest. So, I had already decided that since I was going to keep living at home and I had no other expenses that I was going to make double payments. So, I pay $500 a month, and $100 of it goes to the monthly interest it accrues. At $500 a month it will now take me just over 4 years to pay it off. So, the first lesson is this. When paying off things and trying to get out of debt, pick the one that has the highest interest rate and pay that one off first. You can keep making minimum payments on other things such as credit cards and other debts. But at a 6.8% interest rate, if I had kept paying the minimum I would be paying for roughly 6 years of air and have nothing to show for it. At least I have a beautiful diploma to show for the $22000 principal.
So this is how I handle my finances. I get paid roughly $700 every 2 weeks after taxes, 403b contributions, and my tithe to the church. With the first paycheck of the month, I make my $500 loan payment, and put whatever is left over into my Savings account. With the second paycheck of the month, I pay off my credit card (completely, every month) and then put the rest into savings.
This past Thursday I got paid my first paycheck of the month, so naturally I went to make my loan payment. When clicking "pay now" I got an error that said they couldn't take my payment because either my loan had been paid in full, it had been paid by consolidation, it had been taken over by another servicer, or it had gone into default. The last one wasn't even possible because I was 7 months ahead on my payments. So, I started freaking out, and ran to my dad. We discovered that it had been paid in full on July 5th. So we called both sets of my grandparents who said they didn't do it. Strange huh?
I finally called the loan company who said it had been taken over by Nelnet. And, then I called Nelnet who said they didn't have it. And, real people weren't available till 8am the next morning. So, I called then and found out they did have my loan and just haven't loaded it into their system yet.
So lesson #2, check your loan account carefully and frequently. And, don't be afraid to call and ask questions. It's your debt, and it's going to be your name it affects for the rest of your life.