The Beginner’s Guide to Paying Off Student Loans

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This report was originally published on June 2, 2015.

Graduation is an exciting time. But for many graduates, this exhilarating period also embodies the start of “real adult life,” and a big part of that means paying off student loans.

Most student loan providers offer a six-month grace period before you have to start paying off your student loans. Yet, that time comes rapidly and once the bill arrives, it can be confusing.

After I graduated with my bachelor’s degree, I milked the grace period, pretending I wasn’t actually in debt while trying to get my life together.

When the first bill arrived, I wasn’t sure who my lender was, how much I actually owed and what my repayment terms were. I was in for a surprise when I realized my original loan balance of $18,000 had ballooned to $23,000 by the time I graduated. Somehow I had blocked the reality of interest from my mind, too.

If you’re a new graduate or you’re just looking for the basics on repaying student loans, here’s your go-to guide to pay off student loans, so that you can be better informed than I was.

Figure out the who, what, when and where of paying off student loans

When you are just getting started, you’ll want to know the who, what, when and where of paying off student loans.

Who do you owe?

This step may sound obvious, but it can be a bit confusing as your student loan lender isn’t necessarily your student loan servicer. For example, my undergraduate loans were provided by the Department of Education but were serviced by companies called ACS, Brazos and Nelnet.

Not sure where to start? Your first step is to go to the National Student Loan Data System (NSLDS) to see who is your loan servicer — i.e., who you will be paying. Think of loan servicers as third parties that are managing your payments.

It’s crucial to know who your student loan servicer is so you can actually begin to pay back your student loans and keep in communication with the company, especially if you are struggling to make payments.

What do you owe?

As I mentioned, I thought I owed around $18,000 and didn’t even think about interest charges. It wasn’t until I saw the final number in black ink that it hit me. It can be shocking to find out how much you actually owe. And if you’re like me, your parents helped you along, and you just signed on the dotted line and set it and forget it.

To truly understand what you owe, you need to know:

  • How much you owe
  • How many loans you have
  • What the interest rates are on the loans

Once you know who your loan servicer is, log into its website to get a clearer picture of what you owe. Each loan servicer is different, but you should be able to easily access your account to find out your loan information, including total balances and interest rates.

Student Loan Hero’s parent company, LendingTree, also offers the My LendingTree platform, which makes it easy to access all of your student loan data in one place. Not only can you see exactly how much you owe, you can also see your repayment options and get actionable tips on paying off student loans faster.

The one piece of information you will need to find out what you owe on one of the Federal Student Aid (FSA) websites is an FSA ID. In the past, you would have a Federal Student Aid PIN to access the information, but as a security update, the Department of Education is now using the FSA ID. To get started, sign up here for an FSA ID or read more about the FSA ID if you need help.

When do you make payments?

After you have verified your loan servicer and gathered all relevant information on your loans, it’s time to figure out when you make payments. As a recent graduate, you are likely entitled to a six-month grace period.

When you log into your loan servicer’s website, there should be information on when you need to make a payment. One way to make sure you stay on top of payments is by setting up calendar reminders a few days before payments are actually due.

Where do you make payments?

Typically, you can make a payment within the user portal of your loan servicer’s website. You’ll need to sync your bank account to make payments. You could also go old school and mail a check, but for easy access, you can make online payments.

Understand your repayment options

When you graduate, you are automatically enrolled in the standard repayment plan for your federal student loans. This is a payment plan of fixed monthly payments over the course of 10 years. This means you will make equal payments for 10 years until your debt is gone.

If you are carrying six-figure debt, the monthly payments under the standard repayment plan could likely be four figures and difficult to handle. Using something like the extended repayment plan or Income-Based Repayment plan might be a better option. Here is a rundown of repayment options for federal loans:

  • Standard repayment plan: This is the standard default plan for most student loans and gives borrowers 10 years to pay back their debt. This option has a shorter time frame than most of the other options, meaning you will pay less interest over time. If you can afford it, make more than the minimum payments to really save on interest and get out of debt faster.
  • Extended repayment plan: Borrowers with more than $30,000 in debt can extend their repayment to up to 25 years. The payments under this plan can either be standard (equal monthly payments) or graduated (increasing over time). This plan is ideal for people who have lots of debt and cannot financially manage the 10-year standard repayment plan.
  • Graduated repayment plan: This plan can be useful for borrowers who expect their income to continue growing over time. One caveat: Because of smaller payments early on, you’ll be paying less of your student loan balance in the beginning. This means more interest will accumulate over time on this plan than with a standard repayment plan. Monthly payments start out low and increase every two years over a 10-year repayment period.
  • Income-Based Repayment (IBR) plan: For borrowers who are experiencing financial hardship or having lower incomes, IBR might be a good fit. These plans are designed so that your minimum monthly payments are capped at 15% of your discretionary monthly income.
  • Income-Contingent Repayment (ICR) plan: This plan calculates your monthly payment based on your salary as well as family size. Loans under this plan are also eligible for forgiveness, if unpaid after 20 to 25 years. You do not need to demonstrate financial hardship to qualify for this plan — but you will pay more in interest over time.
  • Pay As You Earn (PAYE) repayment plan: Borrowers who demonstrate financial hardship can have their monthly payments limited to 10% of their discretionary income under this plan. If your loans aren’t paid off after 20 years, the balances are eligible for forgiveness. Note that if the loans are forgiven, current IRS rules say that forgiven loans can be considered as taxable income, so you may be hit with a hefty tax bill.

It is important to keep in mind that these various plans apply only to federal student loans. Private student loans often have fewer repayment options and less flexibility in switching between them. To discuss private student loan repayment options, talk to your lender.

Choose the best repayment option for you

After you get a firm grasp of what repayment options are available to you, it’s time to choose the best one to pay off your student loans. Consider your current income and employment situation, as well as how much you can afford to put toward your debt.

It’s crucial to do the math and understand how much you will be paying in interest over time with whichever plan you choose, but it’s also important not to jump into a plan that will stretch your finances too thin.

If you’re having a difficult time managing all of your federal student loans, you may want to consider consolidating through a direct Consolidation loan. This option helps make managing payments a bit easier by creating one new loan to replace several existing federal loans. You are then left with one loan, one lender and one monthly payment.

To apply, go to and apply under the Repayment & Consolidation tab. However, if you extend your repayment period through consolidation, you will pay more interest over time.

In addition, while consolidating is helpful, you can also lose some of your borrower benefits, such as interest rate reduction and loan cancellation. If you have federal and private student loans and want to consolidate your loans, look into student loan refinancing.

Through student loan refinancing, you may be eligible for a better interest rate and you could save money in the long term while paying off your student loans. There are some good reasons to consider refinancing your student loans, especially if they’re high-interest and/or private student loans. However, you will be giving up your federal loan protections, such as IBR plans and loan forgiveness, so make this decision carefully.

Important (and not obvious) things you should know

Now that you’ve got the basics down, you can start your student loan repayment. But first, there are several important things you should know as a borrower:

  • If at any point in time paying off student loans is difficult for you, contact your lender immediately or risk hurting your credit score. Your credit score is what lenders use to verify your creditworthiness. If you have bad credit, it will be difficult to find an apartment, get approved for a credit card or get an auto loan. Make your payments on time — and if you can’t, consider requesting deferment.
  • If you have both federal and private student loans, consider paying off private student loans first. Private student loans often have higher interest rates and less-flexible repayment options.
  • If you choose to defer your loans, understand that interest will continue adding up. Before you opt for deferment, determine how much the added interest will cost you.
  • You can save a lot of money in interest by focusing on your highest-interest debt first — often referred to as the debt avalanche method. However, some people believe that the debt snowball method, which focuses on paying off the smallest balances first, is a good strategy because of the emotional wins.
  • Bonus! Student loan interest payments are tax deductible, so include the interest amounts on your tax return.
  • If you are hoping to get your student loans forgiven through a qualifying plan, it’s crucial to note that the current tax law states that the forgiven loans can be seen as income, for which you will be taxed — and that could result in a hefty tax bill. If you are pursuing Public Service Loan Forgiveness, you could be exempt from paying federal income taxes on your forgiven amount.
  • Do you have a cosigner? If so, look into cosigner release. Keeping a cosigner could mean trouble if something happens to you or your cosigner down the line.
  • It’s extremely difficult to discharge your student loans through bankruptcy. There are several steps to this process, including finding a lawyer and paying legal and court fees. In addition, your credit score likely will take a big hit.

The bottom line

When repaying your student loans, make sure you keep on top of things from the beginning so you won’t be faced with any unpleasant surprises down the line. With a few simple steps, this task, which might seem overwhelming at first, can be tackled in an easier way.

Remember to start with the basics. First, figure out how much you owe, whom you owe and when your payments are due. Then, determine additional information, including whether you are eligible for a grace period, what types of payment plans are available and which one is best for your situation.

Keep these factors in mind when making decisions about your student loans and future repayment options as you work toward paying off your student debt.

The information in this article is accurate as of the date of publishing.

Yael Bizouati contributed to this report.

Interested in refinancing student loans?

Here are the top 8 lenders of 2020!
LenderVariable APREligible Degrees 
Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 13, 2019, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 12/13/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit, email us at, or call 888-601-2801 for more information on our student loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 3.46% APR (with AutoPay) to 7.61% APR (without AutoPay). Variable rates currently from 2.31% APR (with AutoPay) to 7.61% (without AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.31% APR assumes current 1 month LIBOR rate of 2.31% plus 0.75% margin minus 0.25% for AutoPay. If approved for a loan, the fixed or variable interest rate offered will depend on your credit history and the term of the loan and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

3 Important Disclosures for Figure.

Figure Disclosures

Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.

4 Important Disclosures for College Ave.

College Ave Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

1College Ave Refi Education loans are not currently available to residents of Maine.

2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.

4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation.

5 Important Disclosures for Laurel Road.

Laurel Road Disclosures

Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.


There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.


For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
For eligible Associates degrees in the healthcare field (see Eligibility & Eligible Loans section below), Lender will refinance up to $50,000 in loans for non-ParentPlus refinance loans. Note, parents who are refinancing loans taken out on behalf of a child who has obtained an associates degrees in an eligible healthcare field are not subject to the $50,000 loan maximum, refer to for more information about refinancing ParentPlus loans.


Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).

Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.

All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to for applicable terms and conditions.

For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.


The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.


The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.


After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.

We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.

We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.

If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.


This information is current as of November 8, 2019 and is subject to change.

6 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.

7 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.76% effective November 10, 2019.

8 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.

1.99% – 6.89%1Undergrad
& Graduate

Visit Earnest

2.31% – 7.36%2Undergrad
& Graduate

Visit SoFi

2.06% – 6.81%3Undergrad
& Graduate

Visit Figure

2.62% – 6.12%4Undergrad
& Graduate

Visit College Ave

2.29% – 6.65%5Undergrad
& Graduate

Visit Laurel Road

1.99% – 7.06%6Undergrad
& Graduate

Visit Splash

1.85% – 6.13%7Undergrad
& Graduate

Visit CommonBond

1.90% – 8.59%8Undergrad
& Graduate

Visit Lendkey

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.