5 Things to Know Before Starting Your Student Loan Payments

on June 9, 2016

Graduating college is a big deal. After you've received your diploma it's time to start working, consider grad school and start paying back your student loans. It's probably the least appealing part of being a college graduate, but it may be the most important.


The worst thing you can do is be unprepared for repayment. There are several important things you'll need to know - or figure out - if you're not feeling 100 percent confident about your loans.


Get to Know Your Loans


A lot of us ignore a problem or something we want to deal with until the very last minute, but that's definitely not the approach you want to take when it comes to repaying your student loans. Review the documents you have about your loan or loans and get a handle on 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?

If you're unsure about anything, contact your loan servicer. They're there to answer your inquiries and collect payments. If you're unsure about any of the terms on your paperwork, check out our student loan glossary.

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 in interest. You also may lose borrower benefits like interest rate discounts or cancellation benefits.

The Department of Education has additional information on 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-than-normal 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 StudentAid.gov.

Figure Out What Your Monthly Repayments Will Be


Creating a budget is a 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 may make your monthly budget a little tighter right 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, some - especially those who want to teach or work in public service - may be eligible for these programs. 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.

Looking for more help? Check out our top 10 tips for grads dealing with student loan debt.



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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