Tips to Get Ready for Student Loan Repayment
Graduating from college is a huge accomplishment, and the official start of adulthood for most graduates. With all the excitement going on, it’s easy to forget about the money that got you through school in the first place. Before your grace period sneaks up on you, it’s important to get ahead of the loan repayment process so you’re prepared when it’s time to start paying back your student loans. Here are eight tips to get you ready.
1.Gather Your Student Loan Information
How many loans did you take out? Are they subsidized or unsubsidized? Are they federal loans or private loans? Different loans may have different interest rates, minimum payments, and repayment terms. To find your federal student loan information, go to My Federal Student Aid and log in with your FSA ID (what you used to complete your Free Application for Federal Student Aid (FAFSA® ). If you have private student loans, you can find this information on your credit report. Having the answers to these questions is the first step to understanding how to pay them back.
2. Understand Your Grace Period
The first six months after graduation (or drop below half-time enrollment), there is a grace period for Federal Direct Stafford Loan holders. Basically it’s a period of time for you to get settled before you have to start making your payment.. If you are in the process of job hunting after graduation, the grace period can be beneficial to you because it gives you time to start building a solid financial future.
If you want to start paying your student loans back right away, you have that option even if your loans aren’t officially in repayment.
3. Student Loan Repayment Plan Options:
Pick the best one for you Did you know there are different ways you can pay back your federal student loans? Some of your repayment plan options include the standard repayment, income-based repayment, and pay as you earn plans. This is a good topic to bring up to your financial advisor or guardian who is helping you so you can determine what plans are available to you, and what would work best for you.
There are also a lot of great calculators and tools made available to give you estimates of your repayment amounts under each plan. An easy one to use because it will import your federal student loan information if you log in with your FSA ID (the username/password you used to the complete the FAFSA®), is the U.S. Department of Education’s Repayment Estimator.
Utilize your grace period leading up to your repayment period to pick the best repayment plan for your situation. If you don’t pick one, you’ll be placed in the 10-year standard repayment plan.
4. Create a Budget
It’s important to keep track of each loan, how much you owe, and how much you are paying each month. Create a budget. One common budgeting option is a tracking spreadsheet that you can track your monthly bills. Having an organized system like this makes a big difference so you don’t lose track of anything!
5. Create a Student Loan Repayment Strategy
Your budget should be based on your income, rent, food, savings and other monthly expenses. If you have a little extra every month, you want to come up with a student loan repayment strategy.
If you want to work towards paying off your student loans quickly, you should really analyze your budget. Do you want to pay the minimum amount each month, or can you afford to put more toward your loans? Also be sure to check to see if your employer offers any student loan repayment assistance.
It’s also important to be aware of interest being added to your loans, and you want to make sure you understand how student loan interest works and costs.
Make a plan and set some goals because it can make a big difference in the amount you’ll pay in the long run!
6. Talk to Your Financial Aid Advisor
Just because you’ve graduated doesn’t mean your financial aid advisors aren’t open to you reaching out with questions. They want to make sure you are prepared to successfully repay your student loans.
And if you haven’t graduated, your financial aid office may have resources available to help prepare you for repayment.
7. Student Loan Forgiveness Options: Yes, they do exist
There are federal student loan forgiveness plans you should look into. If you aren’t sure if you’re eligible, you can always call your student loan service (the company sending your monthly statements) and ask them if you are eligible or how a specific forgiveness program works.
But be mindful that there are also many scams. Avoid the automated phone calls offering you loan forgiveness for a fee. You can get the information (and help to apply) you need for free by contacting your student loan service. If you get a call from someone asking you to pay for forgiveness, that is a major red flag.
8. Take a Breath
Don’t let your student loans cause you to become anxious. Focus on the positive. The fact that you’re thinking ahead and trying to understand your options means you’re off to the right start. Once you get finalized and implement your payment plan, the stress will be a weight off your shoulders and you can focus on your other goals.
And remember, if at any time you feel like you are unable to make your student loan payment, call your loan service immediately. They can talk through your options help you stay on track and not fall behind. If you start to miss payments, or default, you could be facing serious consequence.