If you’re like the hundreds of thousands of college students who take out student loans each year, you’ll have something waiting for you when you graduate or leave school: Loan payments that will likely take years to pay off.
When the time to start repaying your loans gets closer, you’ll want to contact your loan servicer to find out exactly when payments will start, how much they will be, and when they are due.
In the best of all worlds, you’ll pay as much as you can each month, with the goal of paying off the loan faster and reducing the amount on interest you would have paid. You’ll also want to make payments on time because late or missed payments will show up on your credit report and can lower your credit rating, which can make it harder to get things such as a credit card, a mortgage or other loans.
With student loans, it’s not uncommon to be dealing with a variety of lending institutions. With that in mind, it might make sense to consolidate or refinance your loans so you’ll only be making a single payment each month. If you have a federal student loan, ask your servicer about consolidation options, and if you have private loans check with your lender to see if refinancing could get you a lower interest rate or a longer repayment term.
Your monthly payment will be based on the amount you owe, your interest rate and the length of the repayment plan. While it’s important to always make at least the minimum payment, experts recommend that you try to pay more whenever you can. This will help retire your loans faster, reducing the amount of interest charges you’ll pay, possibly saving you thousands of dollars.
Keep in mind that once you take out a student loan interest will start accruing. With federal student loans, the government will pay that interest while you are in school. With a private loan, you are responsible for all interest costs from the time the loan is issued so you might want to make interest-only payments while still attending classes.
To help ensure you won’t miss a payment, you should consider having the money automatically withdrawn from your bank account and you should factor these payments into your monthly budget along with your other spending obligations so you can make sure you have enough money to cover all your needs.
To learn more about federal student loans and your repayment options, visit ed.gov and studentaid.gov. To find name and contact information about your loan servicer and other details about your loan, check out the National Student Loan Data System: nsldsfap.ed.gov
The big lesson to be learned with student loans is to find out who you need to repay, how much you owe, when the payments start, how long it’s going to take to pay them off, and then to always make your payments on time.