Countdown to repayment: how college students should prepare for their student loans
If you’re moving ever closer to college graduation, you may be feeling a touch anxious about the future. Don’t worry, this happens to most students facing life outside of school for the first time. However, it’s a smart idea to start planning for your financial future, especially if you’ve used student loans to pay for your education.
Under current rules, for most loan types you have a six-month period after graduation before you need to begin paying back what you owe. But don’t wait until the grace period ends to prepare for repayment. Start now with these steps:
Study up on what you owe
The first step is to educate yourself. By visiting the government’s student loan data system, you can find all kinds of information about your federal loans, such as your balance, whether or not your loans are subsidized, your loan servicer, and more. Note: you may have to contact your servicer to find out when your first payment is due.
Review payment plans
If you don’t land a high-paying job right out of college, don’t panic. You may still have options for repaying your student loans. Depending on your eligibility, you can lower your monthly payment based on income (among a few other factors). The Department of Education has set up a convenient tool for viewing your repayment schedule under various plans. We recommend checking it out to review your options.
Set up auto-pay
If you’re new to the world of making monthly payments, set yourself up for success. Initiate auto-pay to your servicer from your checking account. This way, you won’t have to worry about remembering to pay your loan every month; the money will automatically be debited from your account. Just make sure you always keep enough money in your checking account to avoid a potentially expensive overdraft fee from your financial institution.