11 Tips for Paying Off Your Student Loans After Graduation

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If you’re a recent college graduate with debt, you know you have to start making those dreaded student loan payments soon. But are you fully aware of the best ways to handle this new financial responsibility? We’ve put together 11 pro tips for paying off student loans after graduation, to help you start dealing with your debt — and avoid the potential pitfalls.

By following these student loan tips, you can start off debt repayment on the right foot and avoid making costly mistakes.

Tips for paying off student loans after graduation

1. Use your grace period wisely

Although your federal student loans offer a standard six-month grace period after graduation before you need to start making payments, it doesn’t mean you should ignore your debt.

Instead, use this time to track down the details of your student loans. Figure out how much you owe and to whom. Take note of your interest rates, and learn what your future monthly payments will be.

If possible, start making payments before your grace period is over to save on interest. Unless you have subsidized loans, your debt will accrue interest the entire time your loan is in deferment.

By making small or interest-only payments as a student or in the six months after graduation, you can prevent your balance from ballooning too much.

2. Learn about your repayment plan options

Federal loans automatically go on the standard 10-year repayment plan, but you have other options, too.

If your budget is tight or your income is looking uncertain, you can explore income-driven repayment plans, for example, such as Income-Based Repayment or REPAYE.

Keep in mind, however, that while these plans help lower monthly payments, they also extend your repayment terms. This means you’ll end up paying more money overall due to extra interest charges.

If you have private student loans, speak with your loan servicer about your options. They might be able to adjust your repayment terms if you’re struggling to make your monthly payments.

And if you have strong credit (or a creditworthy cosigner), you could explore refinancing your student loans for new terms and an adjusted monthly payment.

3. Automate paying your student loans after graduation

Automating payments by having them directly debited from your checking or savings account means you’ll never forget to make a payment or pay late fees.

Plus, many private lenders will offer to lower your student loan interest rate (typically, a 0.25% reduction) as a thank you for signing up for autopay.

4. Pay more than the minimum

If you’re looking for tips for paying off student loans that could save you thousands of dollars, here’s one: Pay more than the monthly minimum on your student loans.

This means putting every extra dollar available toward your debt. It might require living a modest lifestyle now, but prepaying your student loans means more financial freedom sooner after graduation.

See for yourself with the calculator below.

Student Loan Payment Calculator

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5. Claim your tax deduction

Paying interest on student loans qualifies you for a tax deduction – up to $2,500 for single filers, in fact.

If you paid more than $600 in interest over the year, your student loan servicer should send you Form 1098-E, which details exactly how much interest you paid.

However, you can still claim the deduction even if you didn’t receive the form; simply contact your servicer(s) to find out the total amount.

6. Carefully weigh direct loan consolidation

The more student loans you have, the more tempted you may be to consolidate them into one. While direct loan consolidation does make for one easy payment every month, you won’t lower your interest rate or save money in most cases.

In fact, if consolidating your loans means extending the term from 10 years to 20, you’ll likely end up paying far more in interest over the life of the loan. Plus, you won’t be able to be strategic about what loans and interest rates you tackle first.

Before applying for federal consolidation, think about whether it will actually benefit you.

7. Explore refinancing your loans for better rates

While direct consolidation won’t get you a lower interest rate, student loan refinancing could. Plus, refinancing multiple loans lets you simplify repayment by combining your loans into one.

When you refinance, you basically replace one or more of your old student loans with a new one from a private lender. If you meet credit and income requirements (or apply with a cosigner), you could get a better interest rate.

Plus, you can choose new repayment terms, usually between five and 20 years. The only downside is that refinancing federal loans turns them private, meaning you lose access to federal forgiveness programs, repayment plans and other protections.

Before applying to refinance your student loans, make sure you understand the pros and cons.

8. Communicate with your loan servicer

If you’re having any kind of issue making payments, the last thing you want to do is ignore the problem.

Don’t wait until you’re late on payments to contact your loan servicer for help – and by all means, don’t wait until you’re in default. Contact your student loan servicer immediately so they can go over all of your options with you.

9. Treat deferment and forbearance as a last resort

If you have no way of making your federal student loan payments every month, entering into deferment or forbearance might be your only realistic option. But if you can do anything to lower your payments to an affordable level and keep paying them down, deferment and forbearance are a bad idea.

Your student loan payments will still be waiting for you when the deferment or forbearance period is up. Plus, if they’re unsubsidized loans in deferment – or any loan in forbearance – you’ll continue to accrue interest while payments are paused and end up growing your balance considerably.

10. Don’t count on bankruptcy

While it is possible to discharge student loans in Chapter 7 bankruptcy, there are no guarantees. For the court to consider it, you’ll have to file a Complaint to Determine Dischargeability, which initiates what’s known as an adversary proceeding. You’re then tasked with proving undue hardship.

Basically, bankruptcy is not a “Get Out of Jail Free” card, so do everything you can to pay off those loans.

11. Beware student loan debt relief companies

There are a multitude of student loan debt relief companies that promise to assist borrowers who are in over their heads – for a fee. However, in most cases, there is nothing a debt relief company can do for you that you cannot do for yourself.

Best-case scenario: You work with a legitimate company and pay them money that could otherwise be put toward your student loan payments. Worst-case: You end up with a shady debt relief company that not only takes your money, but also doesn’t even do the work promised.

Meredith Simonds contributed to this article.

Interested in refinancing student loans?

Here are the top 6 lenders of 2020!
LenderVariable APREligible Degrees 
1.99% – 5.64%1Undergrad
& Graduate

Visit Earnest

1.89% – 5.90%2Undergrad
& Graduate

Visit Laurel Road

2.25% – 6.09%3Undergrad
& Graduate

Visit SoFi

1.89% – 6.77%4Undergrad
& Graduate

Visit Splash

2.39% – 6.01%Undergrad
& Graduate

Visit Elfi

1.99% – 5.41%5Undergrad
& Graduate

Visit CommonBond

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: 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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 2020, 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 7/31/2020. 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 [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 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 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.

  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%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of September 9, 2020. Information and rates are subject to change without notice.
 


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 6.09% APR (with AutoPay). Variable rates from 2.25% APR to 6.09% APR (with 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 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, 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. See eligibility details. 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. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 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 September 10, 2020.


5 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 0.16% effective August 10, 2020.

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.