Non-Frightening Student Loan Repayment Strategies

Are student loan bills scarier than a haunted house?

Woman with laptop

 Westend61/Getty Images

Does it seem appropriate that student loan repayment “season” begins so soon after Halloween? After getting scared by haunted houses and creepy creatures, recent college graduates have something even worse to dread—the arrival of their first student loan bills. The moans emanating from the mailbox can be worse than those heard on All Hallows’ Eve. But, fear not, repaying student loans does not have to get your blood racing.

Get Your Student Loans Organized

The best thing to do in the face of fear is to take control of the situation. Gather information about your existing student loans, determine whether they are federal or private, assemble a list of loan servicers, find out when and how to start making loan payments, and be aware of what you need to do if you have trouble making payments.

Determine When You Have to Start Paying

There are several situations where you might not even have to start making payments on those student loans right away. If you are continuing your education or entering into active duty military service, for example, you might be eligible for a deferment. If you are granted a deferment you will not need to make payments on your student loans, and the federal government may pay the interest on your Federal Perkins Loan, Direct Subsidized Loan, and/or Subsidized Federal Stafford Loan during this time. The government will not pay the interest on any unsubsidized loans, any PLUS loans your parents might have borrowed, or any private student loans. This is not an automatic process, and you will need to submit a deferment request to your loan servicer. If you cannot make your loan payments, but do not qualify for a deferment, you might be eligible to obtain a forbearance. This will allow you to stop making payments or to reduce your monthly payment for up to 12 months, but interest will continue to accrue on both your subsidized and unsubsidized loans.

Take Control Over Your Payment Plan

If you do nothing, you will be assigned a standard 10-year repayment plan for your federal student loans, but you do have some flexibility when it comes to these plans. Many plans are available which can stretch out the repayment term, align the monthly payment more closely with your actual income, or gradually step up payment amounts as time goes on, but these options are not automatic. You have to take control, talk to your loan servicer, discuss your specific financial situation, and apply for the student loan repayment plan that is just right for you.

Think About Loan Consolidation

It can just get too confusing trying to keep track of all the monthly payments for some students, so it might make sense to consider loan consolidation. There are certain advantages and disadvantages associated with this process, but the main benefit is that it combines all of your federal student loans into one Direct Consolidation Loan.

This combination makes it much easier to stay on track with your payments, although private student loans cannot be consolidated into this payment. You can work directly with your loan servicer on loan consolidation, and do not have to pay any fee for this. Just make sure you continue making your regular payments so your loan does not go into default.

Make Payments Easy

You can always pay by regular mail, but more students are opting to have their monthly payments debited electronically so they don’t have to worry about it.

Ask for Help

If you do find yourself in a bit of a financial bind, don’t try to struggle alone or ignore the problem, as both are bad strategies. Talk to your loan servicer immediately, explain your situation, and do whatever you can to stay on track.

Our fears change as we get older. When you were in high school, you might have been afraid of paying for college, completing the FAFSA, or learning about financial aid. Now that you’re a college graduate, take control of those student loan fears.