Unsubsidized Student Borrower Loans: Repayment while in school

twoinanddone
Fri, 27 Apr 2018 22:49:04 +0000

There is no change in status unless your student status changes.

The loans are reported to the credit bureaus as they stand. For example, my daughter is still in school so her entire amount due is reported as an outstanding debt. She’s not obligated to pay yet, so is not in default but also hasn’t made any payments so she doesn’t really get any positive credit score points either. It’s just there.

She just applied for credit and the entire amount of student loans were there, plus $11 balance on her credit card. That was it!

Credit companies get reports electronically, so any amounts borrowed are available for the credit bureaus almost immediately. It just depends on when the bureau pulls the information.

If you are going to pay interest, make sure you are very specific in directing the loan servicer to apply the payment to interest first. They don’t have to do that and if you just send in a check they could apply it to principal of the subsidized loan, split the payments among all loans, apply it to accrued interest first - really they can do whatever they want if you don’t tell them what to do.

You can borrow for the next semester even if you are making payments. Your loan won’t be in repayment status even if you are making payments as long as your student is in school. The only thing likely to change on the credit report is the total amount of loans. If you are paying interest payments, you really aren’t ‘paying as agreed’ because you don’t have to make those interest payments.