4 things you can do to get ready for student loan repayment

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Consumer Marketing Analyst, U-fi student loans, Guest Contributor

If you took out federal student loans you can expect your first student loan statement to arrive a few weeks before the end of your six-month grace period. Be prepared when this arrives so that you – and your budget – will be ready to make your first payment on time. These four steps will help get you ready for your first student loan payment.

1. Know your loan servicers

A loan servicer is a company that handles the billing and other services on your student loans. A loan servicer is assigned to your federal student loan(s) by the U.S. Department of Education and private student loan servicers are assigned by your private loan lender. After the first disbursement of your federal loan, your loan servicer(s) will contact you. If you are unsure which companies service your federal loans, you can look up servicer information at www.nslds.ed.gov or call 1.800.4.FED.AID. Keep in mind if you took out any private student loans through a bank, credit union, or other lender, you will need to contact that financial institution separately. Loan servicers assigned to your federal student loans will not have information on your private student loans and vice versa.

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2. Review the terms of your student loans

Once you know who your federal and private loan servicers are, you will want to make sure all of your loan and personal information is correct. When reviewing your loans, look at the loan type, total principal balance, and interest rate. If your servicer has not already calculated your monthly payment, use a student loan repayment calculator to estimate your monthly payment.

Knowing the due date(s) of your first loan payment is almost as important as making the payment itself. For federal loans, there is generally a six-month grace period after you graduate before your first student loan payment is due. If a loan payment is not made by the due date, the loan becomes delinquent until payment is made. Depending on your servicer or lender, this delinquency can be put on your credit report as a negative mark and negatively affect your credit score. Payments will be made to your loan servicer(s), so make sure they have your correct contact information to ensure you don’t miss payments.

Most servicers and lenders offer auto debit, meaning your monthly payment is taken directly out of your account on or before the due date. By enrolling in auto debit, you won’t have to worry about late payments, and some servicers and lenders even offer interest rate incentives for this type of payment.

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3. Understand your monthly payments and set a post-grad budget

Now that you know the principal balance and interest rates on your loans and have estimated your monthly payments, it’s time to set a budget. Knowing how much you can afford to make in monthly student loan payments will help keep you on the right track and avoid defaulting on the loans. Set up a budget, taking into account your income, current and future bills, and living expenses. Once you know how much you can afford in monthly student loan payments, you can start to research what type of repayment plan best fits your budget.

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4. Research options to best manage your payment after graduation

For federal loans, there are several repayment plans available to ensure that you are able to make your monthly student loan payments. Talk with your loan servicers about setting up a plan that fits your budget. For your federal loans, you can change your payment plan at any time. A plan that works for your budget now doesn’t necessarily have to be the plan you stick with for the duration of repayment.

If you have more than one servicer on your loans or a mix of federal and private student loans, you may be making separate student loan payments every month. If this is the case, you may want to consider consolidating or refinancing your loans. Consolidation will combine your federal loans into one new loan so you have a single monthly payment instead of multiple payments. Refinancing your student loans is similar to consolidation, but can include both federal and private student loans and will give you a new loan with a new interest rate. It’s important to note that student loan consolidation and refinance is not for everyone, so make sure you understand the pros and cons of each option.

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About the Author: Amanda Davis is the Consumer Marketing Analyst for U-fi Student Loans. Her expertise in marketing and sales spans multiple areas within the financial industry including student loans and debt management. A graduate of Bellevue University, Amanda’s current role is focused on digital and social media marketing, partnerships and improving the customer experience.