Student Loan Repayment

Allison Martin
student with money mortarboard

Repaying your student loans is not necessarily a walk in the park for your finances. However, following a specific plan of action can streamline the process and help you eliminate the balances faster.

Step 1: Know Your Loans

Before you signed the loan offer, did you take a moment to read the fine print? If not, now is the time to do so before you commence repayment. You will want to grasp an understanding of the following:

  • What is your lender's name and contact information?
  • What is the current outstanding balance?
  • How much will the loan cost you?
  • What is the interest rate?
  • Are there any fees associated with your student loans?
  • How much will your monthly payments be?
  • What are your repayment options?
  • Does your loan have a grace period?
  • Is your loan subsidized or unsubsidized?

Step 2: Contact Your Loan Servicer

Once you have gathered all the pertinent details about your loans, you will want to contact the loan servicer to confirm the official due date of your first payment. You will also want to inquire about the acceptable forms of payment and any other pertinent details you should know regarding the repayment of your debt.

Step 3: Select a Repayment Plan

Depending on the type of loan you have, there may be some flexibility available with regards to repayment.

Federal Loans

The U.S. Department of Education offers the following repayment plans:

  • Standard: Payments are fixed over the life of the loan. This plan is available for Direct Subsidized and Unsubsidized Loans, Subsidized and Unsubsidized Federal Stafford Loans, all PLUS loans and all Consolidation Loans.
  • Graduated: Payments increase every two years. This plan is available for the same loan types as the standard repayment plan.
  • Extended: You can choose from standard or graduated payments, but the loan term is lengthier. This plan is also available for the same loan types as the standard repayment plan.
  • Income-Based: These include the Pay as You Earn, Income Contingent and Income Sensitive arrangements. These plans are available for Direct Subsidized and Unsubsidized Loans, Subsidized and Unsubsidized Federal Stafford Loans, all PLUS loans made to students and Consolidation Loans (Direct or FFEL) that do not include Direct or FFEL PLUS loans made to parents.

To learn more and determine which options best serve your needs, reach out to your loan servicer promptly. Also, bear in mind opting out of the standard repayment plan may extend the life of the loan and cost you more in interest over time. However, the added costs may be worthwhile if the extension alleviates extreme financial pressure.

Private Loans

Most repayment plans for private loans are standard. However, you should contact your lender to see if there are any plans you may qualify for.

Step 4: Request Financial Assistance

Are you experiencing difficulty repaying your loans? If so, here are some options you may want to consider.

Federal Loans

The federal government offers the following forms of financial assistance to borrowers:

  • Deferment: This arrangement delays repayment and stops interest from accumulating for a specified period.
  • Forbearance: This arrangement delays repayment for up to 12 months. However, interest still continues to accumulate.
  • Loan Discharge, Forgiveness or Cancellation: This arrangement releases your obligation to repay all or a designated portion of principal or interest on your student loan.
  • Consolidation: A consolidation combines remaining federal student loan balances into one loan with a repayment period between 10 and 30 years.

Qualification criteria vary on a case-by-case basis, so contact your loan servicer to inquire about available options.

Private Loans

If you are the recipient of private loans, financial assistance may also be available to you. Contact your lender if you are having difficulty making your monthly payments.

How to Accelerate Student Loan Repayment

There are several ways to place a dent in your student loan debts without breaking the bank:

  • Trim your budget and eliminate unnecessary expenses from your spending plan. Then use these funds to eradicate your student loan debts faster.
  • Always try to pay more than the minimum due. The more you pay each month, the less in interest you pay over the life of the month. Plus, the quicker you pay off the loan.
  • Enrolling in automatic deductions not only prevents you from missing a payment but may also qualify you for a reduction in interest if you have federal loans.

You can also use the loan repayment calculator below to see how much you need to pay to pay your loan off more quickly.

Living With Student Loans

Although student loan debt can be costly, following these pertinent steps and accelerating repayment can soften the financial blow in less time than you initially expected. Also, remember to contact the lender promptly if you have exhausted all of these options and need additional assistance.

Student Loan Repayment