Ace your student loan repayment plan

Crafting a Repayment Strategy

Before you create a repayment plan blueprint, make sure you understand your student loan obligations. Log into your StudentAid.gov account or contact the Federal Student Aid Information Center to identify your loan servicer. You should receive a loan statement from your servicer at least 21 days before your first payment is due. 

But you don’t have to wait until then to prepare your finances. Your loan servicer should be able to provide an estimated payment amount and due date so you can get started today. Use the information they provide to guide you as you:

•    Review Your Budget - Examine your current expenses and income. Identify where you need to reduce spending so there’s enough money available to make loan payments. 

•    Set Up Autopay - Enrolling in automatic payments not only ensures you never miss a due date but can also save you 0.25 percent on your interest rate. 

•    Research Loan Consolidation - Multiple loans could get tricky if you have varying due dates. But combining them into a single monthly payment can simplify bill payment. Weigh the pros and cons of loan consolidation, especially if you have both federal and private student loans.

The types of loans you took out will determine your repayment options. Speak with your servicer to confirm which one works best for your finances. 

Accelerating Your Repayment

You can pay off your loans faster and save on interest charges by paying more toward the principal balance. Borrowers typically use one or both of these tactics to rid themselves of student debt in less time.

•    Biweekly Payments

Split your regular monthly payment in half and pay it every two weeks. This simple adjustment results in an extra full payment each year! Since there are 52 weeks in a year, you’ll make 26 half-payments. This adds up to 13 full payments annually, compared to the 12 you'd make with a monthly schedule. 

•    Use Windfalls Wisely

Did you receive a tax refund or a workplace bonus? Consider putting at least part of it towards your loan principal. 

What If You Can't Afford Payments?

If you find you can no longer make on-time payments, you might be eligible for a hardship plan.

•    Income-Driven Repayment Plans – Borrowers can choose between four plan options that can dramatically lower monthly payments based on income and family size. Some borrowers may even qualify for zero-dollar monthly payments. 

•    Deferment or Forbearance Options  - These options let you temporarily reduce or pause payments if you meet specific eligibility requirements. However, use them cautiously as interest may continue to accrue.

•    Contact Your Loan Servicer - Your loan servicer can let you know about other options that may exist based on your specific circumstances. 

Beware of Student Loan Repayment Scams

As you navigate your student loan repayment journey, stay informed through communications from your servicer and the United States Department of Education. Be cautious of any offers for loan forgiveness or companies charging fees for services you can do yourself at no cost.

Just as you conquered your coursework and aced your exams, you can take charge of your student loans. Creating and sticking to a student loan repayment plan might seem daunting, but with these strategies, you're well-equipped to tackle this financial challenge.