Know Your Options for Repaying Student Loans

So you’ve completed your education and started your job search. You have cover letters to write, connections to make, and research to do. The last thing you want to worry about during this busy time is your student loan repayment.

It may be tempting to put it off, but the more you know about your options, the better off you’ll be.

Make Your Repayment Plans

If you have federal student loans, you have several options for a repayment plan with different repayment terms and monthly payments. Your loan servicer will likely assign a repayment plan at first, but you can change your plan.

Common payment plans are:

You can’t just pick the repayment plan you want; you must meet certain criteria for each. Find out which payment plan you qualify for, and if you want to change your plan, get in touch with your loan servicer to learn about your options.

What if I Need to Delay Payment?

It’s a common problem: You’ve finished school, but you’re having a hard time finding a job, and your monthly payments are about to begin. How will you pay them?

If you’re having financial difficulty because you can’t find a job or for another reason, find out if you can temporarily postpone or reduce your payments through deferment or forbearance. You must meet specific criteria to qualify for either, so if you’re worried about making your monthly payments, be sure to contact your loan servicer to ask about these options.

Deferment and forbearance are good options for people who are having temporary financial difficulties. If you know you’re facing a long period of financial hardship, it may be better to change your repayment plan than to seek deferment or forbearance.

Consider Consolidation

Consolidation is often misunderstood. It’s not generally a way to reduce your interest rate or the total amount you owe. Consolidating lets you bundle several loans into one, with one monthly payment and one interest rate. According to, “The interest rate on a consolidation loan is the weighted average of the interest rates on the loans being consolidated.”

If you have multiple student loans that are hard to keep track of, you may want to consider consolidation. There is no cost to consolidate, and it can make your life easier. Just be sure that you know your options for consolidation; most federal loans can be consolidated, but not all private loans can be.

What About Paying My Loans Off Faster?

Maybe you found a great job, or you have some money saved. You might want to pay more than your monthly payment to get rid of your student loan faster. This can definitely be a good thing—it can reduce the amount of interest you pay and allow you to pay off your loan faster—but it has its negative side, too.

Before you start putting all your extra money toward your student loans, consider your other debts. Do you have credit card debt or a mortgage with a higher interest rate than your student loan? It usually makes more sense to put your extra money toward the debt that has the highest interest rate.

Keep Asking Questions!

It may seem intimidating at first, but dealing with your student loans doesn’t have to be a hassle. The best way to understand your options is to do some research ahead of time, and get in touch with your loan servicer. Don’t be afraid to ask questions! Remember, it’s not a job interview: You don’t have to have all the answers.