How To Make Student Loan Payments

When you borrow money for school, you’ll generally need to begin repaying your loans once your grace period ends. If you’re wondering how to make student loan payments, this guide will explain when repayment starts, how to pick a payment plan, and everything else involved in the repayment process. 

When do you start repaying student loans? 

After you take out student loans, you typically don’t need to make a payment right away. In fact, both federal and private student loan lenders usually don’t require you to pay your debts while you’re in school or during a grace period after graduation. 

The timeline does differ for federal vs. private student loans, though. Here's what you can expect:

• Most federal student loans: With most federal student loans, you must begin making payments six months after you leave school or after you drop below half-time enrollment. 
• Direct PLUS Loans: Your loans enter into repayment as soon as the money has been fully disbursed. However, grad PLUS loan borrowers qualify for automatic deferment while in school or for six months after leaving school or dropping below half-time enrollment. Parents with PLUS loans have the option to request this same deferment.
• Private student loans: Private lenders set their own rules for repayment. Some require you to begin making payments right away but many allow you to defer payments while in school and for up to six months after leaving school.

Missing payments or starting repayment late can result in a damaged credit score, late fees, and eventually delinquency or default, which can have serious consequences. For default, these include loss of eligibility for additional aid, wage garnishment, and acceleration of your debt, which causes your entire unpaid balance to become due immediately. 

How to start paying student loans

When you’re ready to start making student loan payments, these are the steps you'll need to take. 

1. Find your loan servicer

Your loan servicer is the company that handles billing and payment collection for your student loans.

If you took out a private student loan, the lender that provided the loan is generally the servicer who you’ll make payments to. If you took out a federal student loan, you'll be assigned to a loan servicer that partners with the Department of Education. 

Once your loan amount is disbursed, your federal loan servicer should contact you. You can also sign in to StudentAid.gov and scroll down to the My Loan Servicers section or call the Federal Student Aid Information Center at 1-800-433-3243 to find out who your servicer is. 

2. Review your loan details 

Your servicer should provide you with a statement containing details about your loan, which you can also access online.

Your statement and your online account will typically include details about how much you owe, the due date for your payment, and the total amount you’ll have to pay over time. You should also see options for making a payment, including setting up automatic payments or making a one-time payment out of your bank account. 

If you have federal student loans, you’ll be able to access all federal loan information through your StudentAid.gov account. If you have multiple private student loans, you’ll need to contact each lender individually to access your loan details.

3. Explore repayment plans

If you have private student loans, you'll have made an agreement to pay your loans under a specific repayment plan when you borrowed. For example, you might have agreed to take a loan with a five-, seven-, 10-, or 15-year repayment time. Once you've taken out your private student loan, you must stick with your repayment schedule and typically can't change it. 

If you have federal student loans, you’ll need to choose from one of several different repayment plans offered by the government (more details on them below). You can change your repayment plan anytime after payments start, but you’ll need to let your servicer know, as this will determine the amount of your monthly payment. 

4. Make your first payment through your online portal

Once you've selected a payment plan, you can make your monthly payments. You can do this online using your loan servicer's website. Both the Department of Education and private lenders allow you to link your bank account and make a payment. 

5. Pay on time

It's important to make your payments on time to avoid late fees and negative reports to the credit reporting agencies, which would hurt your credit score. Setting up automatic payments can help you to ensure you pay by the deadline each month without having to remember to make a payment manually.

Your repayment options 

With federal student loans, you have the option of choosing from several different payment plans. These include:

• Standard Repayment: This plan comes with a fixed monthly payment and is designed so your loan will be repaid in full after 10 years. 
• Graduated Repayment: This plan is also set up so you will repay your loan in 10 years (or in 10 to 30 years if you have a Direct Consolidation Loan). Your payments start out lower and increase over time, typically going up every two years. 
• Extended Repayment: You can choose either a fixed or graduated repayment plan with the Extended Repayment plan, and you will repay your loans within 25 years. 
• Income-driven repayment (IDR): There are four options for income-driven plans, each of which set payments at a percentage of your income (10% to 20%, depending on the plan). IDR plans allow for the remaining balance of your loan to be forgiven after you make payments for a certain number of years. 

Think carefully about the right payment plan before making a decision. A plan with a longer payoff time will likely have lower monthly payments but will result in higher interest costs over time. If you’re hoping to qualify for loan forgiveness, including through Public Service Loan Forgiveness (PSLF), you’ll also need to choose an eligible income-driven plan. 

Related: How To Get Student Loan Repayment Help

Consolidation and refinancing options

You don’t necessarily have to complete your entire repayment process with the same lender you started making payments to. You also have the option to consolidate or refinance student loans. 

• Federal loan consolidation: A Direct Consolidation Loan allows you to combine multiple federal student loans into one. It also gives you access to more payment options, including an income-driven option for parent PLUS loans and extended repayment plans lasting as long as 30 years. You will not, however, be able to change your interest rate — your consolidated rate will equal a weighted average of the loans you consolidated, rounded up to the nearest one-eighth of one percent. 
• Private loan refinance: Refinancing involves getting a new loan to repay one or more existing student debts. Your new loan may have a lower interest rate, a different repayment term, and different terms and conditions than your existing private loan.

You can refinance federal loans too, but since refinancing can only be done with a private lender, this often isn't a good decision since you would have to give up many important benefits of federal loans. These include income-driven repayment plans and loan forgiveness. 

While consolidating and refinancing can result in lower payments if you reduce your rate or extend your loan term, you should know a longer payoff time will mean your loan has higher total financing costs over time. Be sure to think seriously about the pros and cons of using these techniques when repaying student debt.