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Common Questions About Student Loan Repayment

February 10, 2017

If you've recently graduated from college, you might have some concerns about how you'll pay your student loans. Here are some answers to common questions about paying student loans.

Can I start making payments before the grace period ends?

Yes. The purpose of the grace period is to allow new graduates to get on their feet financially before committing to monthly loan repayment. The typical grace period is six months, though whether you have one and the exact length will depend on the type of loan you have.

You can make payments before the grace period ends, if you can afford to do so. Making payments during the grace period could reduce the overall interest you pay on the loans and enable you to pay off your loans more quickly.

How do I know which repayment plan is right for me?

Typically, several repayment options are available. This means you should be able to find one that is flexible enough to meet your needs. Asking yourself the following questions may help with your decision:

  • How much can I afford to pay monthly? Will I be able to balance what I can afford to pay against what I am required to pay?
  • Would it be better to pay the minimum payment on multiple loans or consolidate them into a single payment?
  • Which repayment plan will save me the most money over the long term?
  • Which repayment plan will help me pay off my student loans the fastest?
  • How much total interest will I pay under each repayment plan?

For more information on specific types of repayment plans for federal student loans, visit studentaid.ed.gov.

Should I consolidate multiple student loans?

You might opt to combine multiple student loans into a consolidated loan with a single monthly payment. Many borrowers prefer the convenience of making a single payment each month over multiple student loan payments, even if it doesn't significantly change the total monthly amount. But consider the following repercussions first.

For example, you might forfeit some of the benefits that come with federal loans. You could also wind up paying more--and once the loans are combined, you won't be able to pay down the loan with the highest interest rate first.

Some private student loans may be consolidated, though it might be smart for you to wait a few years after graduation before consolidating. You can use that time to build a solid credit history, which could help you earn a better rate when you do consolidate.

What happens if I miss a payment?

If you forget to make a single payment, you should be in the clear as long as you get back on track right away. But if you miss multiple payments, you need to come up with a plan.

Perhaps you've missed payments as a result of temporary financial hardship. In this case, you could be eligible for a deferment. If you qualify, you won't be required to make monthly payments, but you're still responsible for accrued interest on all of your loans during this period. Even if you don't meet the requirements for a deferment, you can seek your lender's or servicer's approval for a forbearance, which also allows you to stop paying your student loans for a period of time, typically six months.

Remember that interest will still accrue, so you may end up owing more over the course of your loan. Think carefully before you pursue either option.