How to make your first student loan payment after graduating from college

Liz Knueven

Sep 12, 2019, 22:18 IST

How to make your first student loan payment after graduating from college

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Making your first student loan payment isn't as overwhelming as it seems.

To make your first student loan payment, you'll need to find out who your servicer is, then login to their website see your details, make payments online, and set up automatic payments.
Then, you'll want to start saving for your first payment, as well as budgeting to make sure you'll always have enough to cover your bills and expenses, including your loans.
Making for first payment early can help you pay back your loans more quickly and offset the interest your loans will accrue during their grace period.
If you can't afford to make your first student loan payment, start looking into income-driven repayment plans or other options, and don't wait until it's too late.
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Making your first student loan payment can seem like a daunting thing. But if you've prepared and not left it until the last minute, the process should be fairly simple.

Not every student loan payment is the same. For federal student loans, you'll get the information you need by logging into your student loan account on the US Department of Education's website.

Then, find out which company is your loan servicer, and go to their website and set up an online account where you can see your loans.

After that, you'll want to figure out what you owe each month, and start making a plan to pay it off. A budget can help you make sure you'll always be able to afford your payment. There are also options available to you if you need to lower or pause your payments.

Paying off your student loans has to start sometime - the sooner you get a jump on repayment, the sooner you'll be loan-free.

How to make your first student loan payment

1. Figure out who your loan servicer is, aka where you'll be sending your payment

You and your friends won't all be sending your student loan payments to the same place - rather, you'll each be assigned to one of nine loan servicers.

You'll find out which one you're assigned to when you do your exit counseling. But if you forgot to take notes, you can also find out through the Federal Student Loan website, which will give you information about who your servicer is and where your current balance stands.

2. Once you've found your servicer, go to their website

There, you'll be able to make an account and login to get more information on your loans, like your payment start date and monthly payment amount.

You'll also be able to make online payments here, or find an address to mail payments to if you want to do it the old-fashioned way.

3. Find out when your first payment is due

Most federal student loans have a grace period of six months to let you get settled after school. That means you'll start paying six months after graduation or after you drop below part-time enrollment.

However, Parent PLUS loans enter repayment right after all the funds have been paid out. You should be able to find this information from your loan servicer.

4. Set up automatic payments

Student loans are the last thing you'll want on your mind as you're busy setting up your post-grad life. So why not just make them happen automatically? Once you're logged in with your student loan servicer, you can do things like set up an automatic payment.

And you'll get rewarded for doing this: When you set up an automatic payment on a federal loan, you'll get 0.25% off your interest rate. On a loan with a balance of $30,000 and an interest rate of 6.5%, a 0.25% interest rate deduction would mean a savings of $586 over the life of the loan

This will help make sure your payment gets there on time each month, and that you never accidentally forget. It just makes for one less thing you have to think about, and an easy way to get a little discount, too.

5. Start saving well before your first payment gets close

Many new grads are surprised by just how much their payments actually turn out to be. Business Insider's Tanza Loudenback reports that the average monthly student loan payment is $353 a month for 10 years.

If you'll be getting your first paycheck at your new job soon, start setting aside money for your loan payment. On top of rent and other expenses you might have as you're starting out, this may be a big adjustment. Make sure you have cash on hand so that you're not caught off guard when your grace period is up.

6. Stick to a budget to make sure you're on track

As a fresh grad, it's a great time to start learning more about money management and thinking about your monthly budget. Now's the time to start building a habit of saving for your goals, saving for retirement, and maybe even starting to get serious about investing.

But to do these things, you're going to have to make a budget. Lay out your expenses and your priorities, and start to think about how you'd like to save and spend. Make sure that your student loans are a part of this planning process.

By making a budget and sticking to it, you can start not only working towards your financial goals and building long-term wealth - you'll also know that you will always have money earmarked for your student loans.

7. Make a plan for repaying

As you're looking at your balances, you can see what your monthly payment is. It's generally based on a 10-year repayment schedule.

But that doesn't mean that you're locked into paying your loans for 10 years. Maybe you got a great job and your income will make it possible to pay more each month. Or you just really want to hustle and have your loans paid off in eight years instead of 10. Paying your loans off in fewer than 10 years could also save hundreds in interest.

If you know when you want to pay off your loans, now's the time to calculate what that looks like each month. Take a look at your monthly budget and see what you'll be responsible for, what you need to save each month, and how much will be left over to determine if you can afford to pay extra each month. There's no penalty for paying back an educational loan early.

8. Not able to pay yet? Don't wait to seek help

If you're unemployed or are experiencing an economic hardship, there are options available to you if you have a federal student loan.

An income-driven repayment plan can help make your loans more manageable. Generally, this plan will reduce the monthly payment based on your monthly income.

It's calculated by looking at your discretionary income, which is calculated by subtracting 150% of the federal poverty guidelines for your family size from your income. That amount is your discretionary income, and an income-driven repayment plan will make your payment no more than 10% of that amount.

When your income increases, so will your payment, but it could be $0, depending on your situation, making it a better option for new grads who aren't sure when their situations will be changing.

You might need to pause your payments altogether due to a medical situation, active military duty, or other reasons. If this is your situation, deferment or forbearance may work well.

In deferment, you won't be responsible for interest that your loan would otherwise rack up, and you could be eligible for up to three years. Forbearance will still accumulate interest, and is available for one year.

If you wait to seek out help with your loans, your loan could fall into delinquency or default, which could hurt your credit long-term.

9. Start making payments early

There's nothing stopping you from skipping that grace period and putting graduation gifts and summer income towards paying off your student loans. In fact, your loans are still earning interest while they're in the grace period.

If you have the resources, you might as well get a head start on your payments and offset some of that interest your loan will start gathering.