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You’re not the only one who took out student loans to pay for school. About 55% of college students graduated with student loans in his 2020, according to College Board data.

The CARES Act, which had suspended most federal student loan payments since 2020, is set to resume on January 1, 2023. Now is a good time to start preparing to pay off your student loans.

Here’s what you need to know about paying off student loans.

How to prepare for student loan payments

After graduating, dropping out of school early, or having less than half your enrollment status, you have a six-month grace period before you must start paying your federal student loans. This will give you time to prepare financially and choose the repayment plan that best suits your unique situation.

However, student loan payments for private student loans vary from lender to lender. Some lenders give him a six-month grace period, while others may require payments to begin while he is still in school.

The type of student loan determines when student loan interest starts accruing.

• Directly subsidized loans: If you have a direct-subsidized loan, the U.S. Department of Education will pay accrued interest on the loan while you are in school, during the grace period, and for six months after graduation.
• Direct loan without subsidy: With this type of federal student loan, you are responsible for interest accrued as soon as the loan funds are paid. You can make interest-only payments while you’re in school or add them to your total balance.
• Private student loans: As with non-subsidized direct loans, you will be responsible for any interest accrued when the private loan funds are disbursed.

student loan repayment tips

Here’s what you can do to prepare for your student loan repayments.

• Update your contact information. If the loan servicer does not have your correct contact information, they may not receive important updates regarding loan amounts or new payment due dates. You can update this information by logging into the loan servicer’s website. Additionally, if you have federal student loans, you should make sure your StudentAid.gov profile is up to date.
• Create a budget that incorporates student loan repayments. We recommend creating a budget if you don’t already have one. Then track your spending for a month or two to see where you can cut back to make room for your student loan payments.
• Increase your income. Increasing your income may be hard, but it is possible. You can pick up a few side jobs like ride sharing, tutoring, and dog walking. Alternatively, you can contact your employer’s human resources department for assistance with student loan repayment. Some employers offer this as an incentive to retain top talent.
• Sign up for automatic payments to avoid late fees. To never miss a payment, sign up for automatic payments. Make sure you have enough money in your account to cover your monthly autopay agreement. Otherwise, you risk paying overdraft or insufficient funds fees.

Which loans have a grace period?

The following types of student loans usually have grace periods:

• Directly subsidized and non-subsidized loans: Also known as Direct Stafford Loans or Stafford Loans, these loans have a six-month grace period before you start paying them.
• Some Private Loans: Some private lenders also offer a grace period of 6 months. You should check with your loan servicer to see if this benefit is offered.

If your student loan doesn’t have a grace period, other deferment options may be available. For example, if you are unemployed and on federal student loans, you can apply for unemployment deferment. Also, some private lenders may be happy to suspend your payments if you are in financial trouble.

It’s important to note that the federal student loan moratorium has been extended through December 31, 2022. This means that most federal student loans never expire and interest rates have been temporarily reduced to 0%.

Do PLUS loans have a grace period?

There is no grace period for Parent PLUS Loans. However, if you took out her PLUS loan while you were a graduate or professional student, the U.S. Department of Education will automatically grant her a six-month grace period after:

• you graduate
• you leave school early
• Enrollment status is less than half

In addition, if you take a PLUS loan for your child, you are entitled to 6 months deferment. However, this is not done automatically. If your child graduates, leaves school early, or falls below half-life enrollment status, you should request this deferral.

How much should I pay each month?

The minimum monthly student loan payment is based on many factors such as the type of student loan, the interest rate, and the repayment period. Generally speaking, the longer the repayment term, the lower your monthly payments (and vice versa).

But keep in mind that you can always make more than the minimum monthly payment to save interest and pay off your student loans faster.

The default payment plan for federal student loans is the 10-year standard repayment plan. Unless you choose a different repayment plan, you will automatically be enrolled in this plan when your loan payments begin.

What happens if I miss my student loan payments?

There are some potential negative consequences for failing to pay student loans. For starters, lenders may charge late fees. Also, depending on the late payment, the loan servicer may report the late payment to one or more of the three major credit bureaus. As a result, this can hurt your credit score.

Additionally, if you are on a federal student loan, being 270 days late on your payments will result in default on your loan. For private loans, typically being 90 days or more late on student loan payments will result in default.

Student loan defaults can further damage your credit. To make matters worse, delinquency on federal student loans can result in wages being garnished.

Continue reading: Missed a student loan payment?this can happen

What if I can’t afford the monthly payment?

If your income isn’t high enough to meet your monthly federal student loan payments, you may have access to one of four income-based repayment plans. Plans, and Revised Pay-as-You-Ement Repayment Plans.

These repayment plans are based on income and family size, with repayment terms ranging from 20 to 25 years.

If you have multiple student loans, you may be able to refinance them. Loan refinancing involves taking a private loan to pay off an existing student loan. With low interest rates, you can lower your monthly payments.

check out: 11 Best Student Refinancing Companies: Reviews and Ratings

What is a Loan Forgiveness Option?

If you have federal student loans, you may be eligible for several student loan forgiveness programs, including:

• Public Service Loan Forgiveness (PSLF) Program: If you work full time for a government or non-profit employer, you may be eligible for the PSLF. The program allows him to get loan forgiveness after making 120 qualifying monthly payments while enrolled in an income-based repayment plan.
• Teacher Loan Forgiveness Program: You can get up to $17,500 in student loan forgiveness if you teach at a qualifying low-income school for five consecutive years.
• Biden Harris Debt Relief Plan: If your 2020 or 2021 income was less than $125,000 ($250,000 for a joint or head of household), you may be eligible for an exemption of up to $10,000.

About the author

jerry brown

Jerry Brown is a personal finance writer, owner of the Peerless Money Mentor blog, and a Credible contributor. He has contributed to major publications such as Forbes Advisor, Business Insider and Rocket Mortgage.

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