Planning for Student Loan Repayment

Header image: Planning for Student Loan Repayment

It can be tough to know where to start with student loan repayment. After you graduate from college, you typically have six months before repayment starts on your student loans. This is your grace period, the time for you to figure out your job and living situation before you are expected to start making payments.

Gather Your Loan Information
The important thing during this time is to get your budget in line and figure out how much your monthly payments are going to be. The National Student Loan Data System (NSLDS) is the US Department of Education’s central database for student aid and has the list of all your federal loans, how much you owe, your interest rate, who your loan servicer is, and their contact information. Visit https://www.nslds.ed.gov/nslds/nslds_SA/ to get started (you’ll need your FSA ID to gain access).

Private loans will not appear on the NSLDS website, so you’ll have to contact each lender individually for the loan information if you have any private loans.

Consider Consolidation
Once you have all your loan information gathered, the next decision is whether or not to consolidate. Consolidating your loans will take all your individual loans and payments and combine them into one balance and one payment.

Keep in mind that federal loans and private loans can only be consolidated together through some private loan options, and you will be forfeiting federal loan benefits to do so.

  • Private loans: Consolidation of private loans can be a good idea if you can get a lower interest rate than your current loans have individually. When you look into consolidation, inquire about the current loan rate. You can contact your loan servicer or visit their online account portal to determine your consolidation options and your repayment options.
  • Federal Loans: For federal loans, visit https://studentaid.ed.gov/sa/repay-loans/consolidation to see the benefits of consolidation. While you can’t lower your federal loan rate, you may find other reasons this is beneficial for you.

Entering Repayment
Once you start repayment, there of several types of options for federal loans:

  • Standard Repayment
  • Graduated Repayment
  • Extended Repayment
  • Revised Pay As You Earn Repayment
  • Pay As Your Earn Repayment
  • Income-Based Repayment
  • Income-Contingent Repayment
  • Income-Sensitive Repayment

For all the details on these Federal Repayment Options, visit https://studentaid.ed.gov/sa/repay-loans/understand/plans. For private loan repayment options, contact your loan provider.

Pick the plan that allows you to pay the debt down in the fastest amount of time with the least amount of interest. Some of the repayment options offer extended repayment terms up to 25 years and very low monthly payments. However, this just means you are incurring more interest and carrying the debt with you through most of your adult life. Other major financial decisions (such as purchasing a home) in your future can be impacted by your choice of student loan repayment plan.

You also want to focus on planning for retirement. After graduating from college retirement seems a lifetime away, however now is the best time to capitalize on that lifetime of savings. The more you can contribute to a 401(k) or Roth IRA now, the more time it has to grow.

The sooner you are out from under your student loan debt, the sooner you can start capitalizing on your financial freedom and bring your focus on your future goals.

Contributed by: Iowa College Access Network

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