How to make your first student loan payment after graduation

  • To make your first student loan payment, you’ll need to find out who your service agent is, then log into their website to see your contact information, make payments online, and set up automatic payments.
  • Next, you’ll want to start saving for your first payment, as well as budgeting to make sure you’ll always have enough to cover your bills and expenses, including your loans.
  • Making an earlier first payment can help you pay off your loans faster and offset the interest your loans will accrue during their grace period.
  • If you can’t afford your first student loan payment, start considering income-contingent repayment plans or other options, and don’t wait until it’s too late.
  • Visit Business Insider’s homepage for more stories.

Making your first student loan payment can seem like a daunting task. But if you’ve prepared and haven’t waited until the last minute, the process should be pretty straightforward.

Not all student loan repayments are the same. For federal student loans, you will get the information you need by logging into your student loan account on the US Department of Education website.

Next, find out which company is your loan agent, go to their website, and create an online account where you can view your loans.

After that, you’ll want to figure out what you owe each month and start making a plan to pay it off. A budget can help ensure that you will always be able to afford your payment. You also have options if you need to reduce or suspend your payments.

Repayment of your student loans must start at some point – the sooner you get a quick repayment, the sooner you’ll be loan-free.

How to make your first student loan payment

1. Determine who your loan servicer is, i.e. where you will send your payment

You and your friends won’t send all of your student loan payments to one place – instead, you’ll each be assigned to one of nine loan managers.

You will know who you are assigned to when you do your exit advice. But if you forgot to take notes, you can also find out on the Federal Student Loan website, which will give you information on who your servicing agent is and where your current balance is.

2. Once you have found your repairer, go to their website

There you can create an account and log in to get more information about your loans, such as your payment start date and monthly payment amount.

You’ll also be able to make payments online here, or find an address to send payments to if you want to do it the old-fashioned way.

3. Find out when your first payment is due

Most federal student loans have a six-month grace period to allow you to settle in after school. This means you’ll start paying six months after you graduate or drop below part-time enrollment.

However, Parent PLUS loans come into repayment immediately after all funds have been disbursed. You should be able to find this information from your loan officer.

4. Set up automatic payments

Student loans are the last thing you want to think about while you’re busy organizing your post-college life. So why not make them happen automatically? Once you’re connected with your student loan officer, you can do things like set up an automatic payment.

And you’ll be rewarded for it: When you set up automatic payment on a federal loan, you get a 0.25% discount on your interest rate. On a loan with a balance of $30,000 and an interest rate of 6.5%, an interest rate deduction of 0.25% would mean a savings of $586 over the life of the loan

This will help ensure that your payment arrives on time each month and that you will never accidentally forget. It’s just one less thing to think about and an easy way to get a little discount too.

5. Start saving long before your first payment ends

Many new graduates are surprised at how much their payments really are. Business Insider’s Tanza Loudenback reports that the average monthly student loan payment is $353 per month for 10 years.

If you’re about to get your first paycheck at your new job, start putting money aside to pay off your loan. Along with rent and other expenses you may have at the start, this can be a big adjustment. Make sure you have cash on hand so you’re not caught off guard when your grace period is over.

6. Stick to a budget to make sure you’re on track

As a new grad, now is the perfect time to start learning more about

money management

and think about your monthly budget. Now is the time to start building the habit of saving for your goals, saving for retirement, and maybe even start investing seriously.

But to do these things, you’re going to have to make a budget. Establish your expenses and priorities, and start thinking about how you would like to save and spend. Make sure your student loans are part of this planning process.

By setting a budget and sticking to it, you can not only begin to achieve your financial goals and build long-term wealth, but you’ll also know you’ll always have money set aside for your student loans.

7. Set up a repayment plan

When you view your balances, you can see what your monthly payment is. It is generally based on a 10-year repayment schedule.

But that doesn’t mean you’re obligated to repay your loans for 10 years. Maybe you have a great job and your income will allow you to pay more each month. Or you really want to hurry and get your loans paid off in eight years instead of 10. Paying off your loans in less than 10 years could also save you hundreds in interest.

If you know when you want to pay off your loans, now is the time to calculate what that looks like each month. Look at your monthly budget and see what you’ll be responsible for, what you need to save each month, and how much you’ll have left to determine if you can afford to pay the extra each month. There is no penalty for prepaying a student loan.

8. Not able to pay yet? Don’t wait to ask for help

If you are unemployed or experiencing economic hardship, you have options if you have a federal student loan.

An income-oriented repayment plan can help make your loans more manageable. Generally, this plan will reduce the monthly payment based on your monthly income.

It’s calculated by looking at your discretionary income, which is calculated by subtracting 150% of the federal poverty guidelines for your family size from your income. This amount is your discretionary income, and an income-driven repayment plan will pay you no more than 10% of this amount.

As your income increases, your payment will also increase, but it could be $0, depending on your situation, making it a better option for new grads who aren’t sure when their situation will change.

You may need to put your payments on hold entirely due to a medical condition, active military service, or other reasons. If this is your situation, adjournment or abstention can work well.

In the event of a deferment, you will not be responsible for any interest your loan would otherwise accrue, and you may qualify for up to three years. Forbearance will still accrue interest and is available for one year.

If you wait to seek help with your loans, your loan could become delinquent or default, which could hurt your long-term credit.

9. Start making your payments early

There’s nothing stopping you from skipping that grace period and using graduation gifts and summer earnings to pay off your student loans. In fact, your loans are still earning interest during the grace period.

If you have the resources, you might as well get a head start on your payments and offset some of the interest your loan will start to collect.

Related cover of How to Do It All: Money

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