How to Start Paying Student Loans

Your student loan payments may seem eons away when you’re still in school, but it won’t be long before your lenders expect you to cough up those monthly payments. 

If you haven’t planned for that expense, you might be in trouble. 

This guide will cover everything you need to know about how to handle your student loans successfully and when they kick in. Knowing how to start paying student loans can set you on the path to responsible money management for life.

In this guide:

• When do you start paying student loans
• How to start paying off student loans
• Where do you pay your student loans
  • How to pay federal student loans
  • How to pay private student loans
  • How to pay student loans online

When do you start paying student loans?

When you begin making your monthly student loan payments depends on your lender. Most federal and private lenders allow a grace period of six months after you leave school before those payments kick in. 

That grace period can allow you the luxury of not locking yourself into the wrong job solely to get money flowing in quickly after graduation. 

Federal student loans allow a six-month grace period, including:

• Direct Subsidized Loans (sometimes called Stafford Loans or Federal Direct Loans)
• Direct Unsubsidized Loans (also sometimes called Stafford Loans or Direct Loans)
• Graduate PLUS Loans

Note: Unsubsidized loans accrue interest even during any periods of deferment, including this grace period, so if you can swing payments as soon as you take out the loan, do so for those.

>> Read more: What’s the Difference Between Subsidized and Unsubsidized Loans?

How to start paying off student loans

As you prepare for life after graduation and for those loans to kick in, you probably have all sorts of questions, such as, “How do I start paying my student loans?”

Don’t worry. Your lender or servicer will keep you in the loop. It’s your job, however, to pay attention. 

You’ll receive statements or a payment book, or the same information via email, showing when your payments are due and where you need to send them. If you move, keep your loan servicer updated on your address, and give the post office your forwarding address.

If you have federal loans, you’ll likely be given an option as to what payment plan you want. You’ll need to consider which one might best suit your unique set of circumstances.

Plan ahead for student loan repayment

To get off on the right foot with your student loan repayment, think ahead. Don’t assume you’ll be able to come up with the money needed for your loans without some planning. 

Before your loan payments kick in, look at your income, expenses, and budget. Factor student loan payments into your when deciding how much you’ll pay for your apartment or what you can afford for a car payment. 

Missed student loan payments after the grace period can show up on your credit report and impact your credit score. And the longer you take to pay off your loans, the more time they accrue interest. 

If you can afford to pay more than the minimum payment amount at any point, do so to pay off your loan early. The only exception to this is if you’re planning to qualify for student loan forgiveness (such as through an income-driven repayment plan or Public Service Loan Forgiveness).

How to pay your student loans faster

Here is a strategy that might help you pay off your student loans faster if you stick to it: At the end of the month, divert any extra cash you have toward a second payment on the loan with the highest interest rate. 

>> Read more: Which Student Loans to Pay Off First

Use all the unexpected money that comes your way each month, such as overtime pay, gifts, and money from side hustles. You’ll see that student loan balance slowly but surely dropping each month, and once it’s gone, you can snowball that money into the loan with the next-highest interest rate.

Where do you pay your student loans?

You might notice the name on your correspondence is different from the name of the company you borrowed from. (Or maybe you don’t remember who you borrowed from.) That might make you wonder, “Who do I pay my student loans to?”  

The process of managing student debt can be confusing. You don’t always remit payments to the place you borrowed from. 

Take federal loans as an example. You owe the money to the U.S. Department of Education, but you don’t send it there. You’ll send the payment to the student loan servicer that manages your federal loans. 

With private student loans, you’ll likely send the payment directly to the lender if it manages loans in-house. But in some cases, you might remit payment to a third-party company that services the loans. If this is the case, you’ll receive a notice indicating where to submit your payments.

How to pay federal student loans

You’ll receive a notice indicating who your student loan servicer is. You can also find this information in the National Student Loan Data System (NSLDS), the government’s central database for federal loan information.

You don’t get to pick your servicer; it will be assigned to you. Several companies handle federal student loan accounts, but some of the bigger ones include Navient, Nelnet, and Great Lakes.

When you’re assigned a servicer, you can’t switch unless you take out a Direct Consolidation Loan or refinance into a private loan. That’s why it’s important to handle your account responsibly and contact your servicer promptly if you’re ever unsure you’ll be able to make a payment on time. 

Your servicer will send you information about repayment plan options and ask you to enroll in one.

Here are the repayment options you’ll see for federal loans:

• Standard Repayment Plan: This option will repay your student loan debt in 10 years, or up to 30 years for a loan consolidation plan.
• Graduated Repayment Plan: With this plan, your payments start at a lower amount and go up every two years until your loans are paid off within 10 years (or 30 years for a consolidation loan). 
• Extended Repayment Plan: This plan may use graduated or fixed payments, and will get that balance to zero within 25 years. 
• Revised Pay As You Earn (REPAYE): Your payment each month will total 10%of your discretionary income and may result in loan forgiveness after 20 years of payments. 
• Pay As You Earn (PAYE): This is like the revised version, except the monthly payment of 10%of your discretionary income will never be more than what you would have paid with the 10-year Standard Repayment Plan. 
• Income-Based Repayment Plan (IBR): Under this option, your payments will be 10 or 15 percent of what your discretionary income is and not more than you would have to pay under the standard repayment plan, with loan forgiveness after 20 years of payments.
• Income-Contingent Repayment Plan (ICR): Your payment will be the lower amount of either 20% of your discretionary income or what you would have to pay on a 12-year fixed repayment plan. 
• Income-sensitive repayment plan: The monthly payment is calculated based on your annual income, and the loan will be fully paid off after 15 years of payments. 

How to pay private student loans

Usually, if you have private student loans, you’ll send your payments to the lender you borrowed from. If not, the company will contact you and the correspondence will tell you how to pay.  

Your repayment terms for private loans were arranged when you took out the loan, and you may get a lower interest rate if you set up auto payments. It can add up to a considerable amount over the life of the loan. 

You’ll need to make the minimum monthly payment on all your loans, whether they are federal or private. But if you have extra money to pay down student loans faster, send it to your private lender first.

Private interest rates are typically higher, and private loans don’t come with the flexibility or protections of federal loans if you’re unable to pay in the future.

How to pay student loans online

With most servicers, you can automate student loan payments by setting up payments online. You might even get a discount for doing this, and by scheduling your payments, you won’t have to worry about which loans have been paid each month.

To sign up for autopay, visit your loan servicer’s website and set up repeating payments directly from your bank account.

You’ll need to make sure you always have enough money in your account to avoid overdrafting, but you also won’t have to worry about missing a payment and incurring late-payment penalties..