Note that the situation for student loans has changed due to the impact of the coronavirus outbreak and relief efforts from the government, student loan lenders and others. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.
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College graduation is a time of new beginnings. It’s also when you’ll have to begin making student loan payments soon, potentially for the first time.
Federal student loans and many private student loans allow you to defer payments while you’re in school and for up to six months after graduation, but this grace period will be over before you know it.
“Grace periods give you time to transition between school and work, but those six months go by quickly,” said Misty Lynch, a certified financial planner and lead financial consultant with John Hancock.
We consulted experts and identified eight key steps you’ll need to take to be ready when your grace period ends.
1. Start planning early
You might not be looking forward to making student loan payments, but it’s important to not procrastinate.
“Plan ahead to make sure you start loan payments as soon as they’re due,” Lynch advised. Starting on the process early gives you time to take care of any paperwork you need to complete.
“If you’re applying for an Income-Based Repayment Plan, it takes time to complete the application and verify your information. Don’t wait until the day before your first payment is due to set this up,” said Vicki Jacobson, a financial aid coordinator at Missouri State University. See below for more information about this process.
Jacobson recommended you contact your servicer around two to three months before the end of your grace period. “Call your servicer over the summer when they’re more easily available and can help you select a repayment plan,” Jacobson said.
2. Find out what and whom you owe
If you’re like most students, you probably took out multiple loans, which means you’ll need to get ready to deal with multiple lenders.
“Know how much you owe and who you owe,” Jacobson said. She advised visiting the National Student Loan Data System to find out which companies are servicing your federal loans and visiting AnnualCreditReport.com to get your credit report, which will list all your private loan lenders.
You also can pull up information on all your loans through the Student Loan Hero dashboard, one of the many free resources available on our site.
“Compile a list of all your loans, the loan ID numbers, the monthly loan payments, the due dates, interest rates, and lender contact information,” advised Mark Kantrowitz, a student loan expert and the publisher of Private Student Loans Guru. Your school’s financial aid office can help you find this information, he said.
3. Contact your lender
The next step is to contact your lenders to confirm that they have your updated address, to ask how to set up an online account, and to explore repayment options.
“The lender will send you coupon books or statements,” Kantrowitz said. “However, the payment is still due even if you don’t receive them.”
4. Set up a budget
It’s important to know how much money you’ll be able to devote each month to repaying student loans because that amount will influence your choice of repayment plans. Setting up a budget allows you to see how much money you’ll put toward your loans and which expenses can be trimmed so that you can pay back your debt as quickly as possible.
“Your student loans should be at the top of your budget since default interest rates are high and loan debt is nearly impossible to cancel,” Lynch said. “You may be able to negotiate in other areas, but you will not have much wiggle room when it comes to your student loans.”
You should live below your means as long as you can to get rid of student debt quickly, she advised. This effort might include keeping your old car a little longer or living with a roommate.
5. Explore repayment plan options
Once you know the names and details of all your lenders and the amount you can afford to pay, visit the company websites to explore repayment options. There are different ones for private and federal loans.
Federal student loans offer a standard repayment plan, a graduated plan, and income-driven options. Check out our complete guide to student loan repayment to learn about all the possibilities for repaying federal and private student loans. You also might be able to score a lower interest rate by refinancing your debt, but first, make sure you know the pros and cons of student loan refinancing.
Select a plan that has the highest monthly payment you can afford so that you can pay off your loan as quickly as possible and save on total interest charges, Kantrowitz advised. However, there are caveats. If you qualify for Public Service Loan Forgiveness, you’ll need to enroll in an income-driven repayment plan.
6. Sign up for your plan
After you evaluate repayment plans carefully, sign up for your choice on your lender’s website or call the company to complete the process. You’ll want to find out what information you need to submit, if any, to be eligible for your chosen plan.
Kantrowitz also advised signing up for direct debit so that payments are made automatically from your checking account. “Not only will you be less likely to be late with a payment, but many lenders give a slight discount as an incentive,” he said.
7. Start paying right away if you can
Although many student loans have a grace period, you don’t have to use it. In fact, it’s a great idea to start making payments as soon as you can after graduation.
“Students can pay down the interest that has accumulated on their federal Direct Unsubsidized Loans during their grace period,” Jacobson said. “Any interest which has accumulated will be capitalized, or added to, the principal loan when the grace period ends.”
In that case, you’ll have to pay interest on the accrued interest as well as on the principal balance, which makes repayment costlier.
8. Get help
Paying your loans ASAP after graduation often makes sense, but not everyone can do it. You might not find a job right away, or your income might be too low to start payments. If this happens, you still have options.
“You can apply for forbearance if you can’t find any way to pay the student loan bill,” Lynch said. Federal loans and most private loans allow you to enter into forbearance, which pauses your monthly payments. This option should be a last resort, though. “Putting off your loan payments for any amount of time means more money will be required to make monthly payments in the future,” she warned.
If it takes you time to get on your feet, don’t feel bad. Be proactive and talk to your lender immediately to find out options before your payment becomes due.
Interested in refinancing student loans?Here are the top 9 lenders of 2022!
|Lender||Variable APR||Eligible Degrees|
|1.74% – 6.52%1||Undergrad & Graduate|
|1.74% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|1.74% – 6.59%5||Undergrad & Graduate|
|1.90% – 5.25%6||Undergrad & Graduate|
|1.88% – 5.64%7||Undergrad & Graduate|
|1.86% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|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 January 19, 2022.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.69% APR to 6.14% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.99% APR to 5.99% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index. If you apply before 12/15/2021, the index is the one-month London Interbank Offered Rate (LIBOR) and your rate will be calculated each month by adding a margin between 1.89% – 5.89% to the LIBOR. If you apply on or after 12/15/2021, the variable rate will be based on the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. In each case, the variable rate is based on the rate published on the 25th day, or the next business day, of the preceding month, rounded to the nearest hundredth of a percent, plus a margin and will change on the 1st of each month. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 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%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX.
3 Important Disclosures for CommonBond.
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.
4 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 www.laurelroad.com.
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.
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%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates range from 2.49% APR to 6.94% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 6.59% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR 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. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
6 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.
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 11/15/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.75% Fixed APR with AutoPay.
7 Important Disclosures for Navient.
8 Important Disclosures for PenFed.
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.