Get Out in Front of Your Student Loans

5 Smart Student Loan Strategies


Newly-anointed college graduates might feel like they are in the middle of some train tracks when it comes to their student loans. They know there is a big thing somewhere out there which is quickly hurtling towards them, but they aren’t too worried yet because they can’t hear the whistle blowing. Unfortunately, once the train is close enough to hear the warning, it might be too late to take any evasive actions.

Many college graduates think they have a lot of time before they need to think about repaying their student loans, so they spend the summer having fun, start looking for a job in September, and are shocked when the first payment comes due in November. Then there is a lot of scrambling to gather information and learn about payment options, but it is not the best way to make decisions which will impact your financial future. Here are five smart student loan strategies you can implement this summer, so you won’t be surprised in the fall:

  1. Estimate Your Monthly Payments Now: Students are often surprised when they receive their first payment due notice, and see how much they are expected to pay each month. If they can’t manage the amount, it is difficult to scramble and find alternatives. There is no reason to subject yourself to all this stress when you can get a good estimate on your monthly payments now. For federal student loans, visit the FSA website and use the loan repayment estimator. Many private student loan servicers also have payment calculators, or you can contact the servicer directly. Having this information will help you determine whether you need to consider loan consolidation.
  1. Review Payment Plan Options: There are several payment options available for federal student loans, including income-based, deferment, and forbearance. It takes a little time to complete the paperwork for each, so don’t wait until the last minute. Private student loan lenders may have repayment options available, too, but you will need to contact your individual lender to find out what is available.
  1. Pay Some Money Now if You Can: You might have received some money as a graduation gift, and there is nothing which says you can’t put some of it towards interest on your federal student loans now. Contact the loan servicer to find out how you can do this. If you do land a good job and find that you are able to cover more than the minimum payment, it’s always a good idea to pay a little more and reduce the interest due. Contact your private student loan lender directly to find out if you can make interest payments now.
  2. Don’t Start Off on the Wrong Foot: If you really think you won’t be able to make your payments in the fall, the best time to address this situation is right now. It might be hard to admit that you have financial difficulties, but you want to give your lender time to work with you so you can try to find a way out of this situation. Ignoring the problem won’t make it go away, and it could get much worse, especially with federal student loans.
  3. Don’t Pay for Help: Some companies might offer to help you with your federal student loans for a fee, but that is not necessary. Loan servicers that work with the U.S. Department of Education will discuss repayment options, loan consolidation, loan forgiveness, and deferment or forbearance options at no charge to you.