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How to start paying student loans

Key takeaways

  • You'll need to create an account with your loan servicer before you can make payments.

  • Be sure to know what you owe and adjust your budget to free up disposable income to help make the repayment process more seamless.

  • Reach out to your lender to determine if you qualify for a repayment plan or other option to lower your monthly payment.

If you’re currently enrolled in college or recently finished your degree, you’ve likely given some thought to student loan payments. When do you have to start making payments? What do the monthly payments look like? How will they fit into your budget? Are there options to make them more affordable?

If you can, sort out the answers to these questions before the first bill arrives. Most importantly, understand repayment options and prepare your finances before you begin paying your student loans.

When do you start repaying student loans?

Period

When payments are due

When you are a current student

Deferred until six months following graduation

Hardship deferment arranged through lender

Varies by lender

Covid-19 pandemic emergency response deferment

October 2023

Most federal student loans require borrowers to begin making payments six months after graduation, drop below half-time enrollment or leave school. This period before you must start paying is called a forbearance or grace period. Parents who took out PLUS loans don’t automatically have this grace period, though they can request one.

When it comes to private student loans, repayment options and plans vary. Most private student loans let you defer payments until you graduate, and many offer grace periods ranging from six to nine months.

Sometimes, private student loans offer payment plans that let you make interest-only or flat monthly payments during school. You’ll make partial student loan payments once the loan is disbursed.

With the student loan payment pause provision of the CARES Act, borrowers with federal student loans held by the government weren’t required to make payments as of  March 2020. However, that moratorium has since expired, and interest started to accrue again on Sept. 1, 2023. As a result, those borrowers should expect to start making payments again in October 2023.

What if I don’t have a job yet?

If your student loan payments become due and you don’t have a job or any other sources of income, you may be able to apply for temporary relief.

Federal student loans come with deferment and forbearance programs that let borrowers skip monthly payments during hardship. You can read about temporary deferment and forbearance options for federal student loans on the Federal Student Aid website.

You can also get relief by setting up your student loans for income-driven repayment. These plans base your monthly payment on your income, and payments can be as low as $0 for those who qualify.

You’ll need to speak with your lender if you have private student loans. Though these are temporary solutions, private lenders may have deferment options for unemployed borrowers.

Education

Prepare to pay your loans early

If you’re graduating, leaving school or dropping below half-time status, check with your lender or loan servicer to know exactly when and how to start paying student loans. If you haven’t landed a job yet, ask your lender or loan servicer about relief options.

How to start paying off student loans

To make your first student loan payment, you’ll need to set up an account with your loan servicer or lender. You will receive a billing statement from your servicer before your first payment is due. This statement will tell you the payment amount and the due date, and it may include instructions on how to make the payment.

Most student loan servicers let borrowers make payments online, via a check or by phone. Many companies also let borrowers set up their student loans for automatic payments. Lenders often offer a 0.25 percent interest rate discount to borrowers who set up autopay.

If your monthly payments haven’t yet resumed, here are some strategies to help prepare your finances.

Find out who your loan servicer is

Your loan servicer is the company you’ll make payments to. If you have federal loans, you can find your loan servicer by visiting your Federal Student Aid account dashboard or the National Student Loan Data System. If you have private loans, you can check your credit reports.

Keep a record of all your loan servicers — you may have several if you’ve taken out multiple loans. You’ll receive regular communication from your servicers about your loan repayment, and you’ll need to make payments to each.

Know your total balance and monthly payment

Before starting repayment, confirm your total loan balance and monthly payment by logging into your Federal Student Aid account or your account with your servicer. You can use a loan calculator to investigate how different repayment timelines will affect your monthly payment and what happens if you make extra payments. Also, ask your loan servicer about income-driven repayment plans or other options to make your monthly payment more affordable.

Create a budget

Look for ways to ensure your monthly student loan payment fits your budget without leaving you strapped to pay other bills. For example, see if you can reduce discretionary spending to free up more cash for student loan payments.

Set up autopay

Consider setting up your student loans for automatic payments. Doing so can help you lock in any available autopay discounts while helping you avoid missed or late payments.

Repayment options for student loans

Federal student loans are put on a standard, 10-year repayment plan unless you tell your loan servicer otherwise. With that in mind, you should research other plans to make sure you use the best option for your needs.

Many federal student loan repayment plans will let you repay your loans for up to 25 years, and you can secure a lower monthly payment if you repay over a longer timeline. However, a longer repayment term will cost you more in the long run because your loans accrue interest for a longer period.

As you begin your federal student loan repayment, you may consider looking into:

  • Extended repayment plan: The extended repayment plan sets a repayment timeline of 25 years, with payments that can be fixed or graduated. Direct Loan borrowers must have at least $30,000 in Direct Loans to qualify.

  • Graduated repayment plan: Borrowers who expect regular salary increases may benefit from the graduated repayment plan, which starts student loan payments low and increases them gradually over time.

  • Income-driven repayment plans: While income-driven repayment plans will extend your repayment period by 10 or 15 years, they can be a good option for lowering your monthly payments. With these plans, your payments will be a percentage of your discretionary income. Any remaining balance will be canceled at the loan term’s end.

  • Public Service Loan Forgiveness: With PSLF, borrowers working full time for eligible public service employers can pay down their loans on an income-driven repayment plan for 10 years before having their remaining balances forgiven.

Most private lenders offer multiple repayment terms ranging between five and 15 or 20 years. Ask your loan servicers about the options available to you.

Both federal and private borrowers can also consider refinancing to get onto a different repayment track, though this is usually best only for private loans. Refinancing replaces your existing loans with a new one, and it’s one way to get a lower interest rate or different repayment period.

Finding the right payment plan for your student loans will make getting on track with payments considerably easier. Research your repayment options early in the process, and don’t settle until you find a plan that suits your needs and budget.

The bottom line

Repaying your student loans can be nerve-wracking, but it doesn’t have to be. Start by assessing what you owe, and contact your student loan servicer to inquire about ways to make your monthly payment more affordable.

It’s equally important to adjust your monthly budget to ensure you can afford to make timely payments each month. You can also save some interest and protect your credit rating by setting up automatic payments. Most importantly, assess your progress regularly and adjust your repayment plan.

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