Repaying Your Federal Student Loans: Not as Scary as You Think

ByJill Kapinus

The feeling of accomplishment when you graduate is a uniquely beautiful thing. Then it hits you—now you need to start repaying your student loans! Don’t fear. Take a look at how to repay your federal student loans—the what, the how, and the how much.

Get an idea of repayment options

When you’re just getting started on your career, you’ll most likely contribute a smaller amount than when you’re ten years in. For example, if you qualify, you could sign up for a graduated repayment plan wherein the amount you pay increases about every two years as you earn a higher income. Or you could repay your Direct loan and FFEL Program (Federal Family Education Loan) with a standard plan where you pay more per month but wind up paying less interest in the long run.[i]
 

Don’t procrastinate, estimate

Use the U. S. Department of Education’s Repayment Estimator to get a ballpark idea of how long it may take to repay your loan(s) and what you may pay in principle and interest. Do this before contacting your loan service provider so you’ll know what to adjust your payments to, to the extent it is allowable by your loan service provider. If you’re not employed and you don’t have an annual income yet, consult the Bureau of Labor Statistic’s Occupational Outlook Handbook to see what people in your field may be earning.  Salary and employment figures may vary by location.

You can change your mind

Not about borrowing the money, of course, but about how you choose to repay it. If you already chose a repayment plan or were assigned one by your loan provider, you may still be able to change it. As life events occur (moving out, changing jobs, unemployment, etc.), the amount of your income that you can contribute to your loans may fluctuate. Get in touch with your loan service provider to determine if you are able to adjust your payment options.

Consolidation is your friend

If you’ve taken out several federal loans—say, one for each year of your education—you may be able to consolidate them into one Direct Consolidation Loan payment per month. Find out whether it pays to consolidate and explore your consolidation options here.

You’ve put the work in, crossed your t’s and dotted your i’s, and now is your time to embark on a new career path. Repaying student loans isn’t as daunting as it seems. Just remember to pay on time to build good credit!

[i] U.S. Department of Education’s Office of Federal Student Aid: studentaid.ed.gov/repay-loans/understand/plan