What is a Payoff Statement?
If you're thinking about how to get rid of your student loan, a payoff statement is important. This article dives into what you need to know about payoff statements.
Wondering how much you have left to pay — total — on your student loans?
Your student loan payoff statement can help you figure out how to get rid of your loan, and it can be used to help you refinance your student loans or even buy a house.
Before you make your next money move, especially if it involves a major change to your finances, getting a loan payoff statement can be a big help. Here’s what you need to know about payoff statements and how to use them to further your finances.
What’s a student loan payoff statement?
Your payoff statement is a document that tells you the total amount, including principal and interest, needed to completely pay off your student loan. It gives you an amount you can send in by a specific date in order to have your loan considered paid off and closed.
The information included in your student loan payoff statement
Whether you’re getting a Navient payoff statement or some other payoff statement, there are four main pieces of information included:
- Remaining principal. Your principal amount includes the original amount borrowed as well as any interest that has been capitalized and added to the balance.
- Accrued interest. This is the amount of interest you’ve accrued since your last payment. It’s interest that hasn’t been compounded and added to your principal balance.
- Payoff amount. Your total payoff amount is the current principal amount plus accrued interest. When you pay this amount, you’re done with your student loan.
- Good-until date. The last possible date that the payoff amount is good for. Once you pass the good-until date, new interest charges are accruing, so the payoff amount becomes different. If you want to avoid additional charges, you need to cover the payoff amount by the good-until date.
There’s also a good chance your payoff statement includes how long it will take to pay off your loan if you keep making the minimum monthly payment.
How to use your student loan payoff statement
Accessing your payoff statement to finish off your student loans is one of the most common uses. If you’re trying to finish off a debt, especially if you have a low balance, your payoff statement can help you send the right amount. This is helpful if you want to avoid overpaying and getting a check for a few cents. Additionally, paying attention to your statement can help you send the right payment amount so you don’t end up underpaying — and getting charged interest for another month.
However, there are other times that it makes sense to access your payoff statement.
Buying a home
You can purchase a home even when you have student loan debt. However, your student loans are part of your total financial picture, so a mortgage lender will want to know where you stand. Your loan payoff statement can help a lender figure out your debt-to-income ratio and make an assessment of where you’re at with debt.
Depending on the situation, your student loan payoff statement can also help you figure out if you have one or two loans with low enough balances that you can take care of them to make it easier to complete the home buying process.
Refinancing your student loans
If you decide you want to refinance your student loans, having your payoff statement is crucial. The payoff statement will let your new lender know how much it needs to provide in order to create a new loan for your student debt.
When you use a service such as Juno to refinance your student loans, you’re connected with partners that can offer you a good deal on a loan to help you consolidate student debt. You could lower your monthly payment and save money on interest. With the right offer through Juno, you could pay off your debt sooner and get on with your financial life that much more quickly.
You’ll need all your payoff statements for refinancing. Your lender will be able to send funds directly to pay off the student loans, or it will send you the money, which you can use to pay the correct amount to your current servicers.
How to get a student loan payoff statement
Now that you know the importance of a loan payoff statement, it’s time to get one. In many cases, whether you have private student loans or federal student loans, you can get your statement by logging in to your online account. Many lenders and services have a menu option that lets you see a payoff amount or request a payoff statement.
If you have federal student loans and aren’t sure of your servicers, you can visit the National Student Loan Data System (NSLDS). You can set up an account if you don’t already have one, or you can log in if you do have an account. The NSLDS offers information about all of your federal loans, including the programs they were issued under and your servicers.
You can also see your servicers’ contact information, allowing you to contact them and ask about getting a student loan payoff statement.
If you have private student loans, log in to your account or get the contact information online. You can call for information on getting your payoff statement if the lender doesn’t offer you the ability to get it online.
Your student loan payoff statement offers important information that can help you take the next step in your debt repayment journey. Whether you’re trying to finish off the last of your student loan debt or refinance your student loans using one of Juno’s partners, a payoff statement can help you accurately tackle your payments. Additionally, your payoff statement can be useful as you complete other milestones, including buying a home.
Being educated about your student loans is a good way to claim your financial power. Use your student loan payoff statement as a tool to get more from your money and take the next step in your financial future.
Miranda has 10+ years of experience covering financial markets for various online and offline publications, including contributions to Marketwatch, NPR, Forbes, FOX Business, Yahoo Finance, and The Hill. She is the co-host of the Money Tree Investing podcast and she has a Master of Arts in Journalism from Syracuse University
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