Guide to Repaying Student Loans

 

Spring graduations are happening at universities all around us. In this exciting time students will be on the job hunt, starting a new job, and maybe even moving somewhere completely new.

One thing that can sneak up on you during this time is payments starting up on your student loans. Don’t forget about your student loans after graduation. Start budgeting now so you’re ready to pay them off.

 

How Does Repayment Work?

You must start your repayment plan within 6-9 months after you graduate, which gives you a grace period to prepare for making payments. You choose a payment plan that determines your monthly payment. If you don’t choose a plan, the servicer will automatically enroll you in a Standard Plan. This plan relies on the size of your loans. 

You will receive notice of your monthly payment around 30 days before the first payment due date. Around 21 days before the first payment is due, you will get your first bill.

 

What Do You Need to Do?

Before you start paying back on your loans, you will need to set up your account through your loan service.

 These are the steps you need to take to set up and start repayment:

• Update your contact information on your servicer’s website.
• Choose a repayment plan.
• Enroll in auto pay. This is an optional choice, but more convenient and saves you .25% on your interest rate.
• If you signed up for auto pay, make sure there’s enough money in your bank account before the due date.

 

What Should Your Monthly Payment Be?

 If you are still looking for a job or not financially secure, it’s best to just make the minimum payment.

If you are in a place where you can pay more on your balance, you should raise your monthly payment. For instance, if you usually pay $160 each month, consider increasing it to $200-250 to pay off your loan sooner.

Use the loan simulator from the Federal Student Aid Office to determine your student loan payments. The U.S. Department of Education provides it.