How To Make Your First Student Loan Payment – Forbes Advisor

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Many students rely on student loans to finance their education. But for most, they won’t make their first payment until they graduate. If you are having trouble remembering the details of this freshman loan, here are the steps to take before making your first student loan payment.

When is your first student loan due?

The majority of student loans don’t come due until after you graduate, so you can focus on your education instead of paying back your loan. This is different from traditional loans such as a mortgage, car loan, or personal loan, which all require the first payment within a few weeks of the payout.

If you’re a student on federal loans, your first payment is due six months after you leave school, which is the standard grace period. However, if you are a Parent PLUS loan borrower, your debts will be paid back as soon as the money is paid off. However, you can defer payments if you wish.

If you have a private student loan, your grace period is set by your lender. Many allow borrowers to choose their preferred repayment time. For example, borrowers can often choose to start paying immediately after receiving the money, make small interest payments while they are still in school, or defer payments entirely until six or even nine months after graduation.

5 steps to paying your first student loan

If you recently graduated or are mid-term, your first student loan payment is likely coming up. Follow these steps to make sure you are starting on the correct foot.

1. Find your loan service provider

You may have already received letters or emails from your student loan service provider reminding you of your first payment. However, if you haven’t received a letter or you don’t know who your loan service provider is, now is the time to find out.

For federal student loan borrowers, log on to the Federal Student Aid website to view the details of your grant, including federal student loans. It should list all of the information about your loan, such as: B. Your account balance, interest rate, servicer and first due date.

If you have a personal student loan, AnnualCreditReport.com can provide you with a free credit report. Your report will list your credit and credit accounts and you can find the appropriate lenders there. Create an account on the lender’s website or contact them directly to see when your first payment is due. If you have multiple loans through more than one lender, you will need to contact each one individually.

2. Check your interest rate and your repayment term

If you have several different student loans, you can have different interest rates for each one. The interest rate on federal student loans changes every year, so the loan you took out as a freshman and the loan you took out as a senior will likely have different interest rates.

Also, be aware of your loan terms, which indicates how long it will take to repay your debt. Most federal loans start with a 10 year repayment schedule, while private loans usually let you choose the term when you take out the loan. Longer repayment terms usually result in lower monthly payments, but you pay more interest fees than with a shorter repayment term.

3. Compare the available payment plans

If you have a private student loan, you probably chose your repayment schedule when you first paid out the money. Review the rules of your plan and write down the payment amount and due date. If you think you cannot afford your payments, contact your lender and see if they have alternatives that can help.

However, if you have a federal student loan, you can choose your plan at the start of the repayment (and change it at a later date if necessary). If you don’t do anything, you will automatically be added to the standard repayment plan, which offers fixed monthly payments over 10 years.

However, there are alternatives if your monthly payments under the standard amortization are too high. For example, you may be eligible for an income-driven repayment plan (IDR). These plans base your payments on your income and household size. Plus, the rest of your debt will be forgiven after 20 or 25 years, depending on which IDR plan you choose.

You can also explore other federal repayment options, including:

  • Graduated repayment plan. Payments start lower and increase gradually, usually every two years. You will pay off most of the loans in 10 years.
  • Extended repayment schedule. You have fixed or staggered payments and your loans are paid off within 25 years. Borrowers must owe more than $ 30,000 to qualify.

Not every borrower is eligible for every federal repayment plan, so read the guidelines carefully before making your decision. If you plan to avail yourself of lending options like Public Loans (PSLF), you will need to meet additional repayment requirements. It’s worth reading the fine print before making your first payment.

4. Consider Autopay

After reviewing your refund options, you should sign up for automatic payment. This service will automatically deduct your monthly payment from your bank account so you never miss a payment. Also, many lenders offer an interest rate discount (usually 0.25%) for borrowers who are signed up for automatic payment.

However, autopay can cause problems if you have inconsistent income or live from paycheck to paycheck. You run the risk of overdrawing your bank account if you don’t have enough to cover your loan payment – which would likely result in additional fees from your bank and loan service provider.

If you don’t want to set up automatic payment right now, create a calendar reminder so that you can remember to manually make your loan payments each month.

5. Make your first payment

Now that you’ve got all the details together, it’s time to make your first payment. Register on your credit service provider’s website and keep your login details to hand, be it on a notepad near your desk or in a password manager.

Each credit service provider has its own way of processing payments. Bookmark the payment page so you can get there quickly if you need to make a payment. When you set up Autopay, keep an eye on your inbox. You should be told that your payment will be debited from your account on a specific day, or you should receive a notification when the payment is complete.

Plan for the long term

Student loan repayment is a marathon, not a sprint. And as with any long-term engagement, you can run into problems or hiccups along the way.

If you ever have any payment problems, contact your credit service provider right away. Explain your situation and ask about alternative payment plans. Most lenders offer forbearance or forbearance options that temporarily suspend your student loan payments with no penalty. If you have a federal income-oriented plan and you lose your job or face a pay cut, you could even cut your payments to $ 0.

If you have enough cash, you can make additional payments on your student loan. That way, you can pay off your debt early and save you potentially thousands of dollars in interest.

Even if you’ve set your loans to auto-pay, be sure to stop by occasionally to see the progress you’re making. You can regularly reassess your payout strategy and make sure it still makes sense for your current financial situation.

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