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Tips for Repaying Your Student Loans

For recent college graduates, student loan payments come up fast. Most students have a six-month grace period after they graduate before they must begin repaying their student loans. You have options to better manage your education debt - and here are some tips to get you started.

  1. Know what you owe. It can be hard to keep track of multiple student loans but with the government's National Student Loan Data System, you can keep track of your federal student loans in one place.
  2. Select the right repayment plan for you. Find out how much you owe in student loans and select a repayment plan that best fits your financial situation. Your monthly payment can be based on your income if you choose an income-driven repayment plan. Estimate how much you’ll be paying each month with our Monthly Loan Payment Calendar
  3. Aim for 10 years. The standard repayment period for student loans is 10 years and ideally, that is enough time to pay off your debt. If you end up struggling with your monthly payments, you can stretch out your loans to 20 or even 30 years. Your monthly payments will become more manageable but you will be paying much more in interest.
  4. Make automatic loan payments. Make things easy by setting up automatic withdrawals from your bank account so you don’t miss a payment. There may even be a discount for doing. You want to pay your loans every month. Missing loan payments could result in default. Defaulting on your loan could adversely affect your credit score and future borrowing ability.
  5. Pay off the loans with the highest interest rates first. A high interest rate costs you every month and compounds for every month you don't pay off the entire balance.
  6. Make more than the minimum payment. Even if you can only afford an extra $10 a month, paying more than the minimum amount is one of the easiest ways in reducing your student debt. Once you get in the habit of paying a little extra each month and as your income increases, you can gradually increase your extra monthly payments. If you’re having trouble making the minimum loan payment, you’ll want to contact your student loan servicer to see if you can switch your repayment plan to one that will allow you to extend your repayment period or to one that is based on your income. You may also consider asking your loan servicer about deferment, forbearance or loan consolidation.
  7. Budget wisely. One way you can put aside more money for your student loan payments is by sticking to a strict budget. Whether that means eating out less, living someplace with a lower rent, selling your car and taking public transportation, or cancelling your cable television, you can decrease your spending even if you’re not able to increase your income. If you are able to land a side or part-time job, that could also help you pay off your student faster. Remember, these sacrifices are only short-term until you are free from repaying your student loans.
  8. Consider IBR. The Income-Based Repayment program that allows a borrower to repay federal loans based on what is affordable for their income, not what is owed. Monthly payments are either 10 or 15 percent of discretionary income, but never more than the 10-Year Standard Repayment Program.

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Last Reviewed: September 2020