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The most important thing to know when you start paying student loans is when your payments are due. Repayment begins when your student loan grace period ends, typically six months after you graduate or leave school.
Making that first payment on time will put you on track for success. But taking some additional steps right away can also help if you want to do any of the following:
Here’s how to start repayment on the right foot.
Your lender will likely work through a that you’ll pay directly. You can manually pay your loans online or with a check, like any other bill. But autopay is especially beneficial for student loans because you’ll usually receive an interest rate discount of one-quarter of a percentage point for signing up.
Autopay lets your servicer debit the monthly payment from your checking account automatically. By enrolling in autopay, you won’t forget to make a payment and fall behind by accident. Just make sure there’s enough money in your checking account each month to avoid overdraft fees.
You pay more interest at the beginning of your repayment term than you do later on. If you want to limit the amount you repay, committing to certain strategies when you start paying student loans can maximize your savings.
You may know right away that you can’t afford that first bill when it arrives. Instead of ignoring your loans, talk to your servicer about paying less with an income-driven repayment plan.
Income-driven repayment plans cap payments at 10% to 20% of your discretionary income and can be as low as $0. After 20 or 25 years of eligible payments, your remaining balance is forgiven, though that amount is taxable. Switching to an income-driven repayment plan early can ensure every payment you make counts toward forgiveness.
You can also lower your payments with and plans. With all of these options, you’ll usually pay more interest than under the s, but that’s better than spending your money on late fees, collection costs and the other financial consequences of .
If you enter the workforce with a government job or at a nonprofit, you may qualify for . PSLF eliminates any remaining federal student loan debt you have after you make 120 qualifying payments.
When you start paying student loans, do the following to ensure all your payments will be eligible for this program.
Teachers and Perkins loan borrowers have additional federal student loan forgiveness options. Understand the requirements of these programs before you make your first payment as well to ensure you’re on track.