The Process Of Making Your Final Student Loan Payment (2024)

FAQs

What happens when you make your final student loan payment? ›

When you make that final payment on your student loan, you might see a brief drop in your credit score — especially if you don't have any other forms of credit on your report. Your score should recover in a few months. You could also see a small increase after paying it off, according to Experian.

Making your final student loan repayment is an important milestone. Once you've had a chance to celebrate, take the next step toward reaching your savings and budgeting goals. Rebalance your household budget and use your newly disposable income to get ahead.

If you don't pick a repayment plan, your loan servicer will place you on the Standard Repayment Plan. On the Standard Plan, you repay your loan(s) over 10 years. Your monthly payments on this plan are based on a 10-year schedule and not based on your income or your ability to pay.

Making all of your student loan payments on time can help raise your credit score. As you pay off your loan, you lower your total debt, which can also improve your credit. Conversely, making late payments on your student loans will likely damage your credit score.

Verifying Your Loan is Paid in Full

A Paid in Full letter will be sent to you approximately 30-45 days after the payoff payment is applied to your loan. You can also verify and print your loan balance information online.

Balloon Payment: An installment payment on a promissory note - usually the final one for discharging the debt - which is significantly larger than the other installment payments provided under the terms of the promissory note.

This date is called the loan maturity date. Borrowers make a formal, written promise to repay a specific amount of money (usually the principal amount of the loan plus any interest and fees) by a specific date, the loan maturity date.

You can send or receive a paid-in-full letter to confirm you no longer owe money to a creditor or debt collector. For example, if you are about to make your final payment to a creditor or debt collector, you may want to send a paid-in-full letter as proof of payment.

Online: Log in to your Nelnet.com account and choose Make a Payment. Phone: Call 888.486. 4722. Mail: Send a check to U.S. Department of Education, P.O. Box 2837, Portland, OR 97208-2837.

What happens if you never pay your student loans? ›

If you don't make your student loan payment or you make your payment late, your loan may eventually go into default. If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability.

You may notice your former servicer has cleared your loan account. For example, your loan balance may come up as “paid in full” on your former servicer's website or on your credit report. This does not mean you've received loan forgiveness. This is part of the loan transfer process.

Let's assume you owe $30,000, and your blended average interest rate is 6%. If you pay $333 a month, you'll be done in 10 years. But you can do better than that. According to our student loan calculator, you'd need to pay $913 per month to put those loans out of your life in three years.

How long does paying off $100K in student loans take? Although the standard repayment plan is typically 10 years, some loans and repayment plans have longer terms, so you could be repaying for 20 or even 30 years.

Monthly payments are adjusted each year as the borrower's income changes. The loan term is up to 25 years. At the end of 25 years, any remaining balance on the loan will be discharged. The write-off of the remaining balance at the end of 25 years is taxable under current law.

Your loans should automatically qualify for forgiveness after you've spent 20 or 25 years in repayment. Reach out to your loan servicer about any steps you may need to take.

If you have both revolving credit (like credit cards) and an installment loan (like a student loan), paying off your student loans will shift your credit mix. This could negatively impact your FICO score.

Your student loan servicer(s) will notify you directly after your forgiveness is processed. Make sure to keep your contact information up to date on StudentAid.gov and with your servicer(s). If you haven't yet qualified for forgiveness, you'll be able to see your exact payment counts in the future.