Your first student loan payment is due; Now what?

The first student loan bills are coming in for the Class of 2019. If graduates are able to stick to the standard plan, they’ll be making payments every month for the next 10 years and be done with it.

But not all borrowers will cancel their loans so quickly. Of federal borrowers who started taking on debt in 2003-04, only 1 in 4 had paid off their debt by 2015, according to the most recent data from the National Center for Education Statistics. As for students who still had debt, about 39% were still in repayment.

New graduates this year can improve their chances by making a plan now to pay off debt and stay on track no matter what obstacles arise.

“A plan will ease the stress you feel when you’re not sure what life after college is like and you have that debt to pay,” says Tracie Miller-Nobles, associate professor at Austin Community College and Fellow of the American Institute of CPA Consumer Financial Education Advocates.

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Here’s how to create a strategy.

Get details on all loans

Don’t wait to find out how much money you owe. Your bill may not arrive before your first due date, say student loan experts.

“Just because you don’t get a bill doesn’t mean you don’t owe money,” says Betsy Mayotte, president and founder of the Institute of Student Loan Counselors.

For federal loans, go to the Student Aid website or the National Student Loans Data System. To find private debt, visit for a credit report, which lists private loan debt and the lender.

Once you know who has the loans, call them to verify or update your contact information. You can also create an online account to track payments.

Learn more about student loan scams in the video below.

Find the right payment plan

Your repayment goal should be to pay as little as possible over time, Mayotte says. Indeed, the longer you repay the loan, the more interest will accrue. For most borrowers, the standard 10-year repayment plan is the cheapest option.

For others, it may mean pursuing a loan forgiveness program, like the Civil Service Loan Forgiveness, which forgives federal loan debt after making 120 payments on an income-based plan while working on time. full for the government or an eligible non-profit organization.

High-income earners can pay off their loans faster by having their manager apply additional payments to their loan balance.

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Borrowers who face low incomes or job uncertainty are the ones to think about.

“There are a lot of options, and borrowers tend to get confused or distracted because there are so many options that aren’t so drastically different,” says Abril Hunt, outreach manager for ECMC, a non-profit organization focused on student success.

Hunt recommends borrowers who can’t make payments on the standard plan try Revised Pay As You Earn or REPAYE. It is the income-based repayment plan that all graduates with federal borrowers can enroll in.

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An income-driven repayment plan, like REPAYE, sets payments at a portion of your income, which can help you fit them into your budget. You will need to recertify your earnings each year. If you lose your job or don’t have one yet, your payments could be as little as $0.

If you’re not sure which plan to choose, use the Department of Education’s reimbursement estimator to find out your payment on each plan.

Automate payments

Once you’ve selected a plan, make sure you never miss a payment. Sign up for automatic payment, but make sure you have enough money in your bank account to cover these direct payments.

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Autopay can also save you money: All federal student loan servicers and most private lenders will reduce your interest rate by 0.25 percentage points when you sign up.

Have a plan if you run into trouble

If the worst happens – a costly medical emergency or job loss, for example – contact your repairer or lender as soon as possible. They can help you work out a short-term reduced payment plan, sign up for income-contingent reimbursement, or request a temporary deferral.

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Suspending payments for a short time can give you some leeway. But interest may continue to rise, so try to pay interest during this time to avoid higher debt.

Reassess every year

Your instinctive decision might be to pick a plan with the lowest payout possible, Mayotte says.

“It might be the right thing to do for your first loan repayments, but as your income increases and your living situation changes, you don’t want to leave it on autopilot,” she says.

Set an annual reminder to reassess your repayment strategy. It could be tax time or when you recertify your income for an income-based plan.

This article was provided to The Associated Press by personal finance website NerdWallet.

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