If you're one of the many recent graduates who are now facing the reality of repaying your student loans, this blog post is for you. We'll give you some tips on ways to start paying back your loans, so you can stay on top of your finances.
Knowing Your Loans
There are two types of federal student loans: Direct Subsidized Loans and Direct Unsubsidized Loans.
Direct Subsidized Loans are need-based loans, meaning that the government pays the interest on your loan while you’re in school at least half-time, during your grace period, and during any deferment periods.
Direct Unsubsidized Loans are not need-based loans, so the borrower is responsible for paying the interest on the loan from the time the loan is disbursed until it’s paid in full. The interest rate for both types of loans is fixed at 5.05% for loans disbursed between July 1, 2017 and July 1, 2018.
To qualify for a Direct Subsidized Loan, you must demonstrate financial need. To determine whether you have financial need, your school will consider the cost of attendance at their school, your Expected Family Contribution (EFC), and other financial aid you’re receiving. If your EFC is less than the cost of attendance, you may be eligible for a Direct Subsidized Loan.
If you don’t demonstrate financial need or if your financial need isn’t fully met with other aid, you may still qualify for a Direct Unsubsidized Loan.
Update Your Contact Information
As you get ready to start paying back your student loans, it’s important to update your contact information with your loan servicer. This way, they can easily reach you if there are any changes to your repayment plan or if they have any questions.
To update your contact information, you will need to log in to your account on the Federal Student Aid website. Once you’re logged in, click on the “My Profile” tab and then select the “Update Contact Information” option. From there, you can update your mailing address, email address, and phone number.
It’s also a good idea to set up an account with a student loan repayment service like SoFi or Navient. These companies can help you keep track of your loans and make sure that you are making your payments on time. They can also offer assistance if you run into any financial difficulties during repayment.
Set a Budget
When it comes to budgeting for student loan repayment, there are a few key things to keep in mind. First, you need to know how much you owe in total. You can find this information by logging in to your account on the Federal Student Aid website or by contacting your loan servicer.
Once you know how much you owe, you need to figure out how much you can afford to pay each month. This will involve looking at your income and expenses and creating a budget. There are many helpful budgeting tools and apps available online, such as Mint or You Need a Budget (YNAB).
Once you have a good understanding of your finances, you can start making a plan for repaying your loans. If you can afford to make more than the minimum payment, consider doing so. Making extra payments can help you save money on interest and pay off your loans more quickly.
If you're struggling to make ends meet or are having trouble making your payments on time, reach out to your loan servicer for assistance. They may be able to offer forbearance or deferment options, which would temporarily lower or pause your payments.
Sign up for Autopay
Autopay is a feature offered by many student loan servicers that allows borrowers to automatically make their monthly loan payments. This can be a helpful way to ensure that you never miss a payment and avoid late fees. To sign up for autopay, login to your account on the Federal Student Aid website and click on the "My Profile" tab. From there, you can select the "Autopay" option and enter your bank account information. You can also set up autopay through your student loan servicer's website.
Give Your Tab a Cash Boost
One way to give your monthly student loan payment a boost is to make extra payments when you can. Any extra money you have can be applied to your loan balance, which will save you money on interest and help you pay off your loans more quickly. You can make extra payments online through your student loan servicer's website or by mailing a check directly to your servicer.
Another way to give your student loan payment a boost is to refinance your loans. This process involves taking out a new loan with a lower interest rate and using the money to pay off your existing loans. This can save you money on interest and lower your monthly payments. You can compare rates and terms from different lenders at Credible.com.
If you're struggling to make your monthly student loan payment, reach out to your loan servicer for assistance. They may be able to offer forbearance or deferment, which would allow you to temporarily stop making payments or postpone repayment until you are in a better financial situation.
See Whether Your Employer Will Chip in
Many employers offer student loan repayment assistance as a benefit to attract and retain employees. If your employer offers this benefit, they may make payments directly to your loan servicer on your behalf or reimburse you for payments that you've made.
To find out if your employer offers this benefit, check with your human resources department or the person in charge of benefits. If they don't offer the benefit, ask if there's any possibility of getting it added as an employee perk.
If you're already paying back your student loans and your employer doesn't offer repayment assistance, there are still things you can do to ease the burden. You can try refinancing your loans to get a lower interest rate or extend your repayment term. You can also look into income-driven repayment plans, which lower your monthly payments based on your income and family size.
If you're having trouble making your monthly payments, reach out to your loan servicer for assistance. They may be able to put you in forbearance or deferment, which will temporarily stop or lower your payments.
Pay Attention to Refinancing
Refinancing your student loans can save you a lot of money in the long run. It's important to pay attention to the terms of your loan and to shop around for the best rates.
Refinancing can be done through a private lender or through the federal government. When you refinance, you're essentially taking out a new loan with a lower interest rate. This can help you save money on interest and lower your monthly payments.
If you have multiple loans, you may be able to consolidate them into one loan when you refinance. This can make it easier to keep track of your payments and may result in a lower monthly payment.
When you're shopping around for a refinance loan, it's important to compare rates and terms from multiple lenders. Be sure to read the fine print and understand all of the terms and conditions before signing anything.
Refinancing your student loans can be a great way to save money, but it's important to do your homework before making any decisions.
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