Have to Take Out a Student Loan? Keep These Tips in Mind to Stay on Track and Pay Them Off

Following these strategies can help North Carolina borrowers manage debt and avoid pitfalls

Student loan debt is one of the largest financial burdens families face in North Carolina and across the country. Whether you are a first-time borrower heading to community college, an undergraduate at UNC Chapel Hill, or a graduate student at Duke University, managing loans responsibly from day one can spare you years of stress. Many borrowers struggle when unexpected events, job loss, illness, injured co-signers—make monthly payments difficult. The good news is that federal and private loan servicers offer options to adjust payments, postpone obligations, and even forgive debt under certain conditions. Below are key tips to help you stay on course, limit added interest, and protect your long-term financial health.

1. Identify and stay in touch with your loan servicer

Your loan servicer is the company that handles billing, repayment plans, deferment requests, and customer service. For federal student loans, servicers are assigned by the U.S. Department of Education. To find yours:

• Log in to your federal student aid account at studentaid.gov and view the “My Aid” section.
• Check your monthly statements or emails from federal servicers, CommonBond, Navient, MOHELA or Aidvantage are among the major contractors.
• For private loans, review your credit report at AnnualCreditReport.com to see the lender name and contact information.

Once you know who your servicer is, save their phone number and email in a secure location. Notify them of any changes in your mailing or email address immediately to avoid missing important notices that could lead to default.

2. Allocate extra payments strategically

If you can budget more than the minimum each month, tell your servicer exactly how to apply the surplus. By default, extra funds may go toward future payments or lower-interest loans, reducing principal slowly. To maximize interest savings and shorten repayment, specify that overpayments apply to the loan with the highest interest rate first. Confirm in writing or via a servicer’s online portal that your instructions were processed.

3. Explore income-driven repayment plans

Federal borrowers have the right to enroll in Income-Driven Repayment (IDR) plans that cap monthly payments at a percentage of discretionary income, 10 percent under the SAVE plan, 10 to 15 percent under Income Based Repayment (IBR), Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE), or 20 percent for Income Contingent Repayment (ICR). These plans also extend loan terms to 20 or 25 years, after which any remaining balance is forgiven (though it may count as taxable income). To apply:

• Complete the IDR application at studentaid.gov/idr.
• Submit proof of income, pay stubs or IRS tax transcripts.
• Recertify annually to maintain eligibility.

Private loan servicers sometimes offer hardship or alternative plans. Contact yours to learn if income-sensitive payment options are available.

4. Know your deferment and forbearance options

If you experience temporary hardship, medical leave, military deployment, natural disaster—you may qualify for deferment or forbearance:

• Deferment: Interest does not accrue on subsidized federal loans while deferred during enrollment at least half time, unemployment, or economic hardship.
• Forbearance: Permits reduced or paused payments for up to 12 months at a time but interest continues on all loan types.

Use deferment sparingly, unpaid interest may capitalize (add to principal) when the benefit ends, increasing overall cost. Always request in writing before missing payments.

5. Leverage Public Service Loan Forgiveness (PSLF) and state programs

Under PSLF, federal direct loan borrowers who work full-time for qualifying public service employers, including North Carolina public schools, state agencies and nonprofits—can have remaining balances forgiven after 120 qualifying payments. To pursue PSLF:

• Submit the Public Service Loan Forgiveness Employment Certification Form annually to the U.S. Department of Education.
• Ensure loans are in Direct Loan status; consolidate FFEL or Perkins loans if needed.
• Work for an eligible employer; detailed guidance is at studentaid.gov/pslf.

North Carolina also offers Teacher Loan Forgiveness for K-12 teachers in low-income schools: up to $17,500 forgiven after five years of service. Check the NC Department of Public Instruction website for qualifying institutions and application deadlines.

6. Protect co-signers and understand release options

Co-signers share full legal responsibility for a loan. If you co-signed for someone, you can request a co-signer release after making a series of on-time payments (often 12 to 24 months) and meeting credit requirements. Private lenders vary; check your promissory note and contact your servicer at least six months before the release eligibility window closes.

7. Keep track of servicer performance and submit complaints

If you encounter billing errors, unprocessed payments or poor communication, you have the right to file complaints:

• Consumer Financial Protection Bureau (CFPB): Submit a complaint online at consumerfinance.gov/complaint or call (855) 411-2372. CFPB forwards your issue to the company and tracks responses.
• North Carolina Department of Justice, Consumer Protection Division: File state-level complaints at ncdoj.gov/consumers or call (919) 716-6000.

8. Avoid debt relief scams

Beware of companies that promise “guaranteed loan forgiveness” or “secret discharge programs” for an up-front fee. Federal law prohibits loan relief companies from charging upfront. Legitimate federal programs are free. Red flags include:

• Requests for large up-front payments before any services.
• Pressure to sign contracts without full disclosure of terms.
• Assurances of immediate loan forgiveness or removal of negative credit entries.

9. Consider consolidation and refinancing carefully

Federal consolidation bundles multiple federal loans into one Direct Consolidation Loan. It can lower monthly payments but may extend repayment and forfeit borrower benefits such as separate grace periods or interest rate discounts.

Private refinancing can secure lower interest rates if you have strong credit and stable income. However, reconsolidating federal loans with a private lender means losing federal protections, IDR plans, PSLF eligibility and deferment options. Always compare long-term costs and benefits before refinancing.

10. Maintain financial wellness habits

Small consistent actions can prevent defaults and build stability:

• Create a monthly budget that prioritizes student loan payments.
• Set up autopay to avoid missed payments and earn interest rate discounts (often 0.25%).
• Build a small emergency fund to cover unexpected expenses rather than suspending payments.
• Seek free financial coaching through NC Cooperative Extension SNAP-Ed or local community colleges.

North Carolina resources

• NC Department of Justice, Consumer Protection Division: Assistance with loan servicer disputes and scam reports at ncdoj.gov/consumers.
• CFPB Student Loan Ombudsman: Help resolving federal loan issues at consumerfinance.gov/student-loans/ombudsman.
• North Carolina State Education Assistance Authority (NCSEAA): Information on state grants, scholarships and forgivable loan programs at ncseaa.edu.
• NC Department of Public Instruction: Teacher Loan Forgiveness details for K-12 educators at dpi.nc.gov.
• Local community action agencies: Free financial counseling and hardship grants, find contacts at nc.communityaction.org.

Student loan repayment can seem daunting, but with the right knowledge and proactive steps, North Carolina borrowers can manage debt effectively. Know your servicer, tailor payments, explore federal benefits, avoid scams and leverage state resources. By staying informed and engaged, you will be better positioned to pay off loans on time and build a strong financial future.