The Beginner’s Guide to Paying Off Student Loans

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Refinance rates with Laurel Road start at 1.89%.

Checking your rates won’t affect your score.

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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 9 lenders of 2021!
LenderVariable APREligible Degrees 
1.88% – 6.15%1Undergrad
& Graduate

Visit Splash

1.88% – 5.64%2Undergrad
& Graduate

Visit Earnest

1.88% – 5.64%3Undergrad
& Graduate

Visit NaviRefi

2.50% – 6.85%4Undergrad
& Graduate

Visit CommonBond

2.25% – 6.39%5Undergrad
& Graduate

Visit SoFi

1.90% – 5.25%6Undergrad
& Graduate

Visit Lendkey

1.89% – 5.90%7Undergrad
& Graduate

Visit Laurel Road

2.39% – 6.01%Undergrad
& Graduate

Visit Elfi

2.13% – 5.25%8Undergrad
& Graduate

Visit PenFed

Check out the testimonials and our in-depth reviews!
1 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. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.

2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

Interest Rate Disclosure

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance 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 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.

Auto Pay Discount Disclosure

You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.

Student Loan Refinancing Loan Cost Examples

These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.

One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.

© 2021 Earnest LLC. All rights reserved.

3 Important Disclosures for Navient.

Navient Disclosures

1. NaviRefi loans are made by Earnest Operations LLC, a member of the Navient family of companies, subject to individual approval and underwriting criteria. California residents only: Loans made or arranged pursuant to a California Finance Lenders Law license. Additional terms and conditions apply.

– To qualify, you must be a U.S. citizen or non-citizen permanent resident of the United States, reside in a state we lend 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. Loan terms are subject to eligibility. Approval and interest rate depend on the review of a complete application. Loan approval is subject to confirmation that your debt-to-income, free cash flow, credit history and application information meet the minimum requirements. You must have a minimum FICO score to be considered.

– You can choose between fixed and variable rates. Fixed interest rates are 2.75% – 6.04% APR (2.50% – 5.79% APR with Auto Pay discount). Starting variable interest rates are 2.13% – 5.89% APR (1.88% – 5.64% APR with Auto Pay discount). Variable rates are based on an index, the 30-day Average Secured Overnight Financing Rate (SOFR) plus a margin. Variable rates are reset monthly based on the fluctuation of the index. We do not currently offer variable rate loans in AK, CO, CT, HI, IL, KY, MA, MN, MS, NH, OH, OK, SC, TN, TX, and VA.

– You can take advantage of the 0.25% Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. NaviRefi rate ranges are current as of June 1, 2021 and are subject to change based on market conditions and borrower eligibility.

– The information provided on this page is updated as of 06/1/2021. Earnest Operations LLC reserves the right to modify or discontinue (in whole or in part) this loan program and its associated services and benefits at any time without notice. Check for the most up-to-date information. Terms and Conditions apply. Call 855-284-4893 for more information on our student loan refinance product.

– Earnest Operations LLC – NMLS #1204917, CA CFL #6054788 – 535 Mission St., Suite 1663, San Francisco, CA 94105.
Navient Solutions, LLC – NMLS #212430 – 123 Justison St., Wilmington, DE 19801. Visit for a full list of licensed states.

4 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.15% effective Jan 1, 2021 and may increase after consummation.

5 Important Disclosures for SoFi.

SoFi Disclosures

Fixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 ( Additional terms and conditions apply; see for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

6 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 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.

7 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. 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. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit

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.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. 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. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.


This information is current as of April 29, 2021. Information and rates are subject to change without notice.

8 Important Disclosures for PenFed.

PenFed Disclosures

Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.