Financial Spring Cleaning: How To Marie Kondo Your Student Loan Records (2024)

Famed de-clutterer Marie Kondo has suggested that the way to a blissfully tidy life is to purge yourself of that which no longer brings you joy. Unfortunately, that barometer probably does not hold for most things financial. The process would probably go something like: Tax forms? Headache inducing; toss. Tuition bills? Stomach-churning; shred. Student debt statements? The opposite of joy; can I just throw out the debt instead?

(To answer that last question: no, you cannot, unless you view “making monthly payments” as a synonym for throwing out debt.)

The good news is that while Marie Kondo’s advice may not apply to your student loan spring cleaning,the advice of personal finance experts can fill in the gaps.I recently spoke with Zack Friedman, aForbescontributor and the founder of Make Lemonade, a personal finance resource site. Here’s what Friedman said you should do if you’re sick of watchingthe following student loan documents gather dust:

Master promissory note:

This is the legal document you’ll receive when you first take out your loan — which is to say, it’s the documentthat details the loan’s terms, and the thing you sign in order to promise that you’ll repay the debt and any interest it accrues. Because this document contains essential loan information, and because things can happen with your debt later down the line (for instance, your loans can be bundled and sold off to a different servicer), it is imperative to hold onto this document for the entire life of the loan. This way, if there’s a dispute with a servicer (like if they say your interest rate is 7.5% when you know you borrowed at a fixed 6.5% term), this is the document you can refer back to.

Monthly billing statement:

If you haven’t gone paperless but you have set up your loan for an automatic payment every month, you don’t need to hold onto these, Friedman says. “As long as you’re set up for autopay, tossing these will probably save you on paper. You do want to be checking the online portal most lenders have, to make sure the payments are being applied correctly,” he said.

Special payment instructions:

Different servicers have different rules and processesaround paying more than the monthly minimum. Some make it easy to do online; other servicers will require a phone call and written instructions with what precisely to do with the extra payment. If you’ve done the latter — called and written to a servicer just to get them to put an extra $50 towards your principal balance — Friedman says you should keep a copy of those written instructions and any response you receive until, at the very least, the payment has been correctly applied.

“As long as it’s applied correctly, you’re probably fine and don’t need to retain it,” Friedman says. But, he continued, proof of a paper trail is paramount in matters of dispute with your servicer, so it doesn’t hurt to hold onto anything your servicer has written back to you for the duration of the loan’s life. “If you have a $100,000 loan, does it hurt you to keep an extra piece of correspondence? How much risk does one want to take? Some people keep literally every billing statement, every credit card statement and bank statement for 10 years. It depends on how diligent you want to be.”

Correspondence around a loan being sold off:

Because there is a secondary market for student loans, it is possible for a loan to begin its life with Lender A and end its life at Lender B, because A sold a portion of its loan book to B. When this happens, you should receive a letter from your new servicer (Lender B) with customer service information and payment instructions. Friedman says you should hold onto this letter and any similar correspondence until you’re absolutely sure everything transferred from A to B (including things like auto-debit) without a problem.

“When a loan is sold, you want to be diligentabout understanding the new lender, how their systems work, logging into their interface, speaking with customer service. Then you want to make sure everything is transferred over properly. Is your interest rate still the same, is your remaining loan life still the same?” he says. “Once it’s transferred and everything isfine, you probably don’t need to retain that correspondence.”

Student loan refinance materials:

When you refinance your student loans, you may need to provide your prospective refinance provider with a bevy of documents: a W-2 or 1099, recent pay stubs, bank statements, and loan billing statements from your current loan servicer. The good news, Friedman says, is once you’re approved for your refi, you don’t need to hold onto any paper copies of your application materials.

“The minute you have your new loan, you don’t need those documentsanymore. Those are really just for the application,” he says.

Because a refi is a new loan, you’ll also get a new master promissory note. Whether you hold onto your old master promissory note is up to you, Friedman says. The important thing is to not lose track of your new one.

Your 1098-E:This is the form you get from your servicer each year that details how much money you paid in student loan interest the year before. You’ll use it to deduct up to $2,500 (at most; there are catches) from your prior-year income. Friedman notes that, like anything else, the rule for keeping these forms is a “judgment call,” the typical rule of thumb is to hold onto tax forms for seven years.

Income-driven repayment plan documents:

If you’ve applied for an income-driven repayment plan (like Income-Based Repayment or the Pay As You Earn program), you’ll need to re-apply for these programs every year. It’s a lot of paperwork, but because it’s reducing your payment burden, Friedman says it’s important to hold onto everything for as long as you’re in the repayment plan, and ideally for the life of the loan.

“It only protects you to have the records. If there’s some kind of discrepancyor challengeto what you think you have, it’s helpful to have the documents,” he says, noting that this advice also applies to anyone who’s enrolled in the public service loan forgiveness program. “For some people, this is the biggest financialobligation they have currently or may ever have, so why not keep this stuff?”

Paperwork from a lender that might be getting sued by the government. Like, say, Navient:

If your lender finds itself the subject of a federal inquiry or lawsuit, like Navient is (the Consumer Financial Protection Bureau has accused it of “failing borrowers at every stage”), Friedman says the document retention advice doesn’t exactly change — but borrowers who feel that they’ve been subject to bad behavior should be even more careful with their records.

“If they feel they’ve been wronged or the allegations of the lawsuitshave happened to them, that’s all the more reason to have written correspondence,” Friedman says. “It’s good to confirm everything, and have some kind of document that records your correspondence.”

Get the best of Forbesto your inbox with the latest insights from experts across the globe.