Don’t let your student loan statement be a surprise in the mail. Be prepared for student loan repayment by asking yourself these three questions:
1. Who are your loan servicers?
When you take out student loans from the federal government, you will be assigned a student loan servicer by the U.S. Department of Education. If you have private student loans, the servicer will be assigned directly by the lender. Your student loan servicer is who you will work with to make payments on your student loans. They can also help you understand your student loan repayment options, and answer any other questions you may have. If you have multiple student loans, you may have multiple loan servicers. Visit www.nslds.ed.gov to look up your federal student loan servicers if you don’t know them. For private loans, contact your lender.
2. How much are your monthly payments and when are they due?
Now that you know who your loan servicers are and where to send payments, you need to know how much to send and when. For federal student loans, there’s generally a six-month grace period after graduation before your first student loan payment is due. By this point, your servicer already put together a student loan repayment schedule. This schedule shows you how much your monthly payments are.
You should receive a statement from your servicer three to four weeks before your payment is due. Make sure your servicer receives your payment by the due date. If you don’t make a loan payment by the due date, the loan is delinquent until you make a payment. Depending on your servicer or lender, this delinquency may be put on your credit report and negatively affect your credit score. Most servicers and lenders offer auto debit, meaning your monthly payment is taken directly from the account you specify on the due date. By doing this you can ensure your payments are never late. Some lenders even offer incentives, like interest rate reduction, for this type of payment.
3. What are my repayment options?
Your federal loans are automatically in a standard, 10-year repayment plan if you have not specified otherwise. If you find that the payments are more than you can afford, there are other options to explore. Federal student loans have several repayment options to help you repay your student loans. Call your student loan servicer and they will help you work through your options.
You can also consider refinancing or consolidating your student loans into one payment. If you have more than one servicer or lender, you will be making multiple payments every month. By consolidating or refinancing, you can make one monthly payment to one servicer. Consolidation will combine your federal student loans into a new loan so you have a single monthly payment. Refinancing can combine both your federal and private student loans into a new loan, with a new interest rate and term. Student loan consolidation and refinancing is not for everyone, so make sure you understand the pros and cons of each.
Following the basic steps outlined above will set you up for successful student loan repayment. Remember that your student loan servicer is there to help, so never hesitate to reach out if you have questions.