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5 Things to Know Before Starting Your Student Loan Payments

5 Things to Know Before Starting Your Student Loan Payments

Graduating college is a big accomplishment to be proud of, yet there's still work to be done if you used student loans. After you receive your diploma, it's time to start working, considering grad school and paying back your student loans. Paying back loans may be the least appealing part of adulthood, but also the most important.

There are several important things you need to know about repaying your student loans, so read on for more tips to keep your financial life happy and healthy.

Get to Know Your Loans

It can feel easy to ignore a task until the very last minute, but that's not the approach you should take when repaying your student loans. So review your loan documents and get a grasp of the following:

  • How much do you owe?

  • What's your interest rate?

  • Who are your loan servicers?

  • How can you contact those servicers in case you have questions?

  • What's your grace period?

Can You Consolidate? More Importantly … Should You?

Most federal loans can be consolidated, or combined into a single new loan. This can be an option to consider if you want to simplify your payments and potentially have lower monthly payments by stretching out the time frame in which your loans must be repaid.

However, keep in mind that by paying off your loans over a longer period, you'll pay more interest. You also may lose borrower benefits like interest discounts or cancellation benefits. The Department of Education has additional information about consolidation requirements.

What Type of Repayment Options Are Available?

Not all repayment plans are the same. The standard 10-year repayment plan for Federal Stafford Loans is far from your only option. Graduated repayment plans allow you to pay less at first and increase your payments over time, while extended repayment plans allow you to spread payments over a longer period.

There are also pay-as-you-earn and income-based repayment plans, which are options for graduates who have a low income relative to their level of student debt. You can determine which repayment plans are best for you at

Figure Out What Your Monthly Repayments Will Be

Creating a budget is key, and your loan payments will need to factor into your monthly spending plan. You can use the Department of Education's repayment calculator to get an idea of what your monthly payments will be.

Don't limit yourself to just the monthly payments; if you can, start paying early and pay more than the required monthly payment. While this will make your monthly budget tighter after graduation, it will save you money you would have paid in interest in the long run. Making extra payments on your student loan is a financially savvy move, if you can make it work.

Make Your Loan Payments Automatic

While you're determining monthly payments, sign up for auto-debit, so your payments are automatically transferred from your bank account to your lender. This can shave a small percentage off your interest rate.

Determine if You Qualify for Loan Forgiveness or Discharge

Most students won't qualify for loan forgiveness or discharge. However, those who want to teach or work in public service may be eligible for these programs. Also, not all loan forgiveness programs will forgive your loan immediately after graduation and you'll need to meet certain criteria to qualify. The Department of Education lists the instances in which your loans can be forgiven or discharged.

When financial aid and federal student loans aren't enough to cover all college costs, consider financing the gap with private student loans. Shop around to find the loans that best fit your needs.

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