How can I start paying back my student loans?

As you get closer to graduation, the amount you’ve borrowed throughout your academic career becomes more important. Indeed, the task of ridding yourself of debt may seem daunting, but you have more control than you realize. To get started on a plan as soon as possible, consider the following steps to make things easier for yourself in the long run.

Step 1: Get organized

Figure out who you owe, how much you owe them, and where to pay them.

You may receive mail from some lenders with invoices for payment. Collect these in one place, as you get them. However, keep in mind that for many four-year college students, your address may have changed multiple times during your school years or your parents’ address is still listed as your permanent address. Be proactive — don’t count on all the mail reaching you at your current residence.

Another thing that sometimes happens is that your loan may be sold, so you may not always recognize who your current lender is. For example, you may have borrowed from the U.S. Department of Education or Sallie Mae but Ed Financial or Navient may be servicing your loans.

In order to fully track down all of your loans and verify who you owe, use your credit report as your beacon of truth. You can download it for free here.

Step 2: Create a spreadsheet

Gather all your servicer and student information into one handy place.

Gather all of your mail and your credit report and build a spreadsheet with all of your student loan information. For each servicer, you will want to go to their website and create an online account. Once you have created the online account, explore the account, and organize the following info in your spreadsheet:

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  • Name of servicer you owe
  • Website for your online servicer account
  • Total principal owed (the total amount you currently owe)
  • Interest rate (gather this for each loan)
  • Monthly minimum payment

Step 3: Add up your minimums

This calculates your total monthly obligation.

Add the minimum monthly payments together by using the SUM function in the spreadsheet to find your minimum monthly obligation to all of your lenders.

Step 4: Make a budget

Once you have this, you can see if you can afford the current minimum level of repayment.

Look at your bank card statements, your bank’s online portal, or explore a free budgeting option like Mint, where you can see your online spending in charts for fast analysis.

Some questions to ask yourself while looking at your spending are:

  • How much money do you have on hand right now?
  • What are you paying for each month, on a recurring basis (bills, other debt, etc.)?
  • Do you have cash on hand for emergencies?
  • How more can your budget allow you to pay on your loans?

If your current repayment plan does not work for your budget, you can adjust your repayment options. If you do this though, keep in mind, you may end up paying more in the long run, so do your best to pay as much as possible, within reason.

If you have taken out federal student loans, you most likely have seven options available. If you took out private student loans, there are some repayment options but they are more limited. Student loan servicers provide live support to help you with your individual situation, you can find their phone numbers and business hours here.

Step 5: Consider your payment methods

Make sure they’re quick and easy to find.

It’s easiest to pay online or by phone, but there is also usually a postal mail option if your situation calls for it. Some servicers will also offer automatic payments but make sure to set those up only if you know you will have enough money in your account — otherwise, you may incur overdraft fees.

Pro tips to keep in mind…

  • Consider making payments during your six-month grace period. Just make sure you contact your loan servicer and state that you want those early payments to go toward the principal of your loan. You can do the same if you pay more than your monthly bill requires you to pay.
  • Make the most of free tools to be strategic about repayment and to track your repayment goals
  • Consider using free personal finance software to set a goal to pay off your student loans. Many free personal finance tools provide free goal setting tools. You can use these tools to set a goal for repayment. You can also use the goal functionality as a fast and easy way to see what the overall cost of different repayment options is.
  • Do what’s most convenient and practical for your situation. Depending on your payment method, you may have more flexibility to pay what you can each month.

If you take these basic steps when it comes to paying back your loan, you’ll help yourself in the long run. But remember that you always have choices and a great deal of flexibility. Do what’s best for you!