Preparing to pay off your student loans might feel like toeing the start line of a marathon. But to get a running start, it’s important to know how to make that first payment.
Whether you’re still in school, left campus six months ago, or just successfully refinanced your student loans, the first step toward making a payment is knowing where to send it.
Find your loan servicer
Whether you have federal or private loans (or both), your payment might not necessarily be going to the lender. Nine companies service Federal Direct and PLUS loans (though that could change):
- FedLoan Servicing
- Granite State
- Great Lakes Educational Loan Services, Inc
- OSLA Servicing
The servicer should contact you as soon as the loan was disbursed. Notification will also be sent if the Department of Education transfers your loan from one servicer to another.
Even a private lender like CommonBond outsources its billing to Firstmark Services.
It’s important to remember that the loan servicer essentially works for you, so if you aren’t sure how to make payments using its billing system, ask them. A customer service rep should be able to tell you about setting up text or email alerts to avoid missing a payment.
3 ways to pay student loans for the first time
No matter how you plan to pay off your student loans, first register an online account with your servicer. The online dashboard will be a one-stop shop. You can track payments and know exactly where your money is going: toward the loan’s principal, interest, or, ideally, both.
The servicer’s website should also include a repayment schedule. This clarifies how often you should be making payments, the due date, and the size of each one.
After identifying your student loan servicer, here are three ways to begin repaying your student loans.
1. Set up autopay with your servicer
Perhaps the best way to avoid delinquency is to set up an automatic payment with your servicer.
Add your bank account and routing numbers to the servicer’s payment management page. You can find these numbers on your checks or by asking your bank over the phone or searching online. A simple search of “routing number” on Bank of America’s website, for example, will get you where you need to go.
Here’s how to add your bank information on the website of federal loan servicer Great Lakes.
Benefit of this payment method: By setting up automatic payments, you could qualify for a 0.25% interest rate deduction on federal Direct Loans or a similarly reduced rate on private loans. If you’re not sure this method is for you, educate yourself on the other pros and cons of automating your student loan payments.
2. Set up autopay with your bank
If you handle other monthly bills through your bank, it might be convenient to pay your student loans this way. Avoid overdraft fees by keeping your bank account balance high enough to cover the monthly charge.
To set up autopay via your bank, make the servicer your payee and include the date and value of your automatic payments. Your servicer will have further instructions on how to complete this process. Sallie Mae, for example, instructs its borrowers to share its mailing address and 16-digit loan group number with your bank.
Many banks allow you to set up recurring payments for as long as a year. It could take several days for an online transfer to be reflected in your account, so set the bank’s payment date earlier than the actual due date.
Benefit of this payment method: Although it’s not advisable or even possible to pay student loans with a credit card, some banks offer rewards for setting up autopay from a checking account.
With Citibank, for example, you might be able to earn monthly points when paying from an account enrolled in Citi ThankYou Rewards. Ask your bank about potential bonuses.
3. Pay your servicer manually every month
If automatic student loan payments aren’t preferable, do it the old-fashioned way. Most servicers allow borrowers to make payments manually online, through a mobile app (if it has one), over the telephone, or via snail mail.
Save your bank information on the servicer’s website to avoid reentering it each time a payment is due. If you’re paying over the phone, have your routing and account numbers ready.
It’s a more involved process to pay by mail, and the servicer might ask you to follow specific directions when stamping and sending. Wells Fargo, for example, asks its customers to take the 10-digit student loan account number from their monthly statement and write it on the check.
While you would make a check out to “Wells Fargo Education Financial Services” in that case, sending a check to a federal loan servicer might actually mean writing it to the Department of Education. The federal loan servicer could also ask you to include an insert from your statement, which includes a payment reference number.
Know that the servicer could cash your check the same day it receives it in the mailbox. It also won’t return the check (or a copy of it). You should, however, see the payment applied online.
Benefit of this payment method: Even though paying manually takes more time, it also gives you more control. If your bank balance sometimes drops below your monthly loan payment amount — or you don’t want to connect the servicer with your bank at all — this could be the safest choice.
The first student loan payment leads to the last
Paying off student loan debt can be scary, but it can also be empowering. After all, that first payment sets you on a course toward becoming debt-free.
Once you begin paying down your debt — and decide on the right payment method — then you can worry about how fast you can finish.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
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: https://www.earnest.com/eligibility. 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 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.54% APR (with Auto Pay) to 7.27% 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 March 18, 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 0318/2019. 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 https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent 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.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com 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 LendKey.com. 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 LendKey.com 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.
5 Important Disclosures for CommonBond.
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 2.5% effective February 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.54% – 7.12%3||Undergrad & Graduate|
|2.54% – 7.27%1||Undergrad & Graduate|
|2.67% – 8.96%4||Undergrad & Graduate|
|3.23% – 6.65%2||Undergrad & Graduate|
|2.69% – 7.43%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|