Student Loans

The care and feeding of student loans

Student loans. You know you have them. And that you eventually have to pay them back. But do you know how the process works?

If not, check out this handy dandy checklist.

Pay attention to your Entrance Counseling session

When you take out federal student loans, you are required to go through Entrance Counseling, usually online. Don’t blow it off—if you pay attention to what you’re being told now, you can save yourself a lot of headaches later.

Read your debt letters

Sent out once a semester, these notifications can help you keep track of how much you owe and how much your payments will be. Paying attention could keep you from overborrowing.

Keep tabs on how many loans you have

If you don’t know if you have student loans or need to check in on how much you’ve already taken out (and how much you have left if you’re closing in on your maximum), refer to your debt letter and talk to Financial Aid.

Talk to your family about loans

Your parents could have taken loans out in your name without communicating it properly. While you can authorize your parents as third-party payers on the loan, when it comes time for repayment, it will affect your credit.

Try to start repaying your loans before you graduate

There are no penalties for getting ahead, and it’ll lessen the amount of interest you pay once your loans go into full repayment. At the very least, try to pay off the interest that is accruing while you’re in school.

Do your Exit Counseling

Just before you graduate, you’ll have the opportunity to complete exit counseling for your loans. Take advantage of it—and pay attention to the messaging. It’ll alert you as to what’s ahead and how the repayment process begins.

Pay attention to lender notices

About this time, your lenders will begin to communicate with you by mail or email. Save them in the event that you will need to refer to them later.

Decide on a repayment strategy

Start thinking about how your repayment methods will affect you in the long run.

Remember, the faster you can pay off your loans, the quicker you can get out of debt and start allowing your credit to work for you.

Start paying down your loans

Just because the grace period exists doesn’t mean you have to wait six months after you graduate to start paying off your loans. If you have the means to start paying them off right after you graduate, do it!

You can even talk to your lender about calculating your monthly payments to keep you on track with a more aggressive repayment plan.

Six months after graduation

Your first bill should arrive. If you find yourself surprised by how much your payments are, talk to your lender.

Because you have been automatically placed on the Standard 10-Year Repayment plan, you may also want to explore the other repayment plans out there to see if any of them might better suit you.

Before you get too hasty in trying to adjust your repayment plan though, take a look at this Department of Education Loan Repayment Estimator with repayment options.

Keep in mind that your finances will be in flux for the first several months after you graduate. So really think about what your financial situation will be once you settle into your first job and look for the most manageable repayment plan. They all have their pros and cons.

If you find yourself in real financial hardship, you can switch to one of the other seven repayment plans or investigate other options for repaying your federal loans.

A note about going back to school

If you go back to school, your federal loans will be deferred—or put off—until six months after your graduate from your new program.

Don’t be afraid to ask for help

If you need help with the student loan repayment process, be sure to set up an appointment with someone in Financial Aid.

If you think you get the basics but maybe would like to sit down with another student to talk about what this can mean for your finances, set up an appointment with the MoneySmarts Team.