Listen Up: This Is Your Student Loan Check In!

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Fall brings plenty of nice and comforting things, such as cozy turtlenecks, pumpkin-flavored everything, spiced chai, and the sweet anticipation of the holidays right around the corner. However, there is something in the air, and it’s not the spook of Halloween – it’s your student loans calling.

Now that you are out of your college years, officially an adult, and know everything there is to know about life (ha!), it’s time to check on your finances. If you’ve found a job, it would be too easy to look at your newfound paychecks like, “Wow, I’m rich!” But, it’s a good time to sit down and really think about your future. Saving for life events and staying out of debt means starting today, putting you on the best path forward straight out of the #adulting gate. So before you get used to a lifestyle of spending a little too freely, first prioritize repaying your student loans.

Too many times I have seen fresh grads ignore this looming debt, thinking it will somehow go away and disappear.  But unfortunately, the only way to really make your debt disappear is to pay attention to it. Make sure you know where you stand. Not doing so could result in unintended consequences, including a lower credit score (which takes years to recover from). After all, your credit health matters to many important areas you’ll soon be considering, including applying for a new credit card or getting future loans for another degree, a new home, or a new car. It can also be reviewed during an application for insurance, an apartment, or, in some states, a job. So now is the time to get ahead of any of these issues before the grace period officially ends.

What’s a Grace Period?

According to the Federal Student Aid, the grace period is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repayment on your loan. The grace period gives you time to get financially settled and to select your repayment plan. Note: Not all federal student loans have a grace period, and for most loans, interest will accrue during your grace period.

Here are a few examples of common loans and grace period timelines according to Federal Student Aid:

  • Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans have a six-month grace period before payments are due.
  • PLUS loans have no grace period. They enter repayment once they are fully disbursed but may be eligible for a deferment. Contact your loan servicer for more information.
  • If you received a Federal Perkins Loan, check with the school where you received your loan.

For most of you who may have graduated in May or June, we’re coming up on the six-month marker. So if you haven’t started paying back, here’s what you need to do to get ahead of your student loans.

Find Out the When and How Much

The term “student loan” can feel ominous – what does it really mean? Do I have to pay the full amount that I owe now? How much is the minimum I have to pay? Can I pay it off monthly, or yearly? What’s better for my credit? How do interest rates work on my loans? What happens if I default?

These are all great questions to ask and do your research on! And don’t worry, you’re not alone. Sites like Federal Student Aid are there specifically to help with these exact questions so that you can get the best repayment strategy that works for your financial needs. The first step here? Log into your FAFSA account to contact your loan provider.

Set Up Automated Loan Payments

Choosing to set up automated payments for your student loans is KEY. First and foremost, you avoid one of the worst things for your credit and your wallet: late fees. Nothing turns a solid debt-to-income ratio into a financial disaster faster than late fees. Whether it’s late fees from not paying your student loan bills on time or interest from running up a balance on your credit card from month to month, think of it as throwing away perfectly good money that could be saved for a rainy day, an upcoming getaway weekend, or just a little more cushion in your bank account.

#RealMoneyTalk: setting up automated payments – not just for your student loans – will give you a better night’s sleep. Having a sound plan in place helps to take the stress out of managing your finances.

Your loan servicer handles all billing regarding your student loan. Each service has its own payment process and can work with you if you need help making payments, plus, you can always switch to a different plan at any time to suit your needs and goals.

Do Your Refinancing Research

Refinancing or consolidating your student loans may also be a great repayment strategy if you need a little more time to boost up your income. According to CNBC, refinancing student debt can bring down the interest rates and reduce what you pay over the life of your loans. But, beware that moving to a private lender also means sacrificing some of the perks of federal loans, including income-based repayment and forbearance.

If you still need a little time after graduation to find a job or get enough income to begin paying back your student loans, you do have other options outside of refinancing or consolidating. Federal student loans have other repayment options, including a postponement for unemployment and lower payment options. The government is on your side and wants to help you on your way to better financial standing. Our advice? Call your loan holder ASAP to see what type of relief you can get. Don’t be afraid, or stressed – you got this!