Here are the 5 easy steps to repaying student loans

Whether you’ve got that degree in hand or you’re just thinking ahead to your post-grad future, eventually you need to know how student loan repayment works. Here’s some good news for you: it’s not as complicated as you might think. Still, it’s worth your time to get familiar with the process so you can cross all your t’s and dot all your i’s.

Timing, interest & other issues: How student loan repayment works

Having a basic understanding of the options available will help you feel more confident in the decisions you eventually make about your student loans. That’s why we’ve put together this step-by-step guide to the student loan repayment process.

Step 1: Find your student loans

The first step in the loan repayment process is to figure out who your loan servicer is — that’s the organization actually collecting your monthly payments. Most likely, you have several. If you have federal loans, contact the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243 to ask them who your loan servicers are. 

If you have private loans, you may have already been contacted by your loan servicer. If not, you can look up your official credit report at and see which companies are listed.

Once you know the servicers, go to their websites and create an online account at each so you can easily manage your payments. 

Step 2: Update your email and mailing address

When you graduate, make sure to update your email and mailing address with your loan servicers. Many borrowers accidentally keep their student email and address listed, leading to missed notifications and updates.

While you’re logged in, you should also sign up for payment reminders to help you avoid missing payments and racking up costly late fees.

Step 3: Understand your repayment terms 

For federal loans and most private loans, the standard repayment plan is 10 years. Borrowers with federal loans can also switch to a graduated, extended or income-driven repayment plan lasting either 20 or 25 years. 

Repayment tip: Stick with the shortest repayment term if you can afford it, as you’ll avoid paying unnecessary interest. The longer the repayment term, the more total interest you’ll pay. The term length will have no effect on the interest rate.

[callout: Repayment tip: Stick with the shortest repayment term if you can afford it, as you’ll avoid paying unnecessary interest.]

Do your student loans have a grace period?

All federal student loans and many private loans come with a six-month grace period after graduation, during which time no payments will be due. This allows borrowers the time to find gainful employment before their loan payments begin. Interest may still accrue during this time, depending on the type of loan you have.

After your grace period is over, the accrued interest may be capitalized (added to the principal). This will increase your monthly payments. You can always make payments before the grace period is over, which may help you save on interest.

Step 4: Decide how to make monthly payments

You can either make payments manually or automatically. All federal student loan servicers and most private lenders offer a slight interest rate discount, usually .25%, if you sign up for automatic payments. Depending on your preference, payments will be withdrawn from your bank account on or before the due date.

Here’s the most important part — automatic payments prevent you from incurring late fees. Late payments of 30 days or more will show up on your credit report and decrease your credit score.

If you prefer to make manual payments, you can do so through a checking account transfer, by mailing a check or through your bank’s bill-pay service. You can also call the loan servicer and pay over the phone. Most lenders don’t allow debit or credit card payments. 

Step 5: Throw in an extra loan payment when you can

You can repay your loans early by making more than the minimum payment or by making an off-schedule extra payment. You may have to specify that the extra payment should go directly toward the balance (also called the principal). Some loan servicers will count extra payments as “prepayment” for upcoming months, rather than applying the extra directly to the principal.

Get comfortable with how student loan repayment works

The student loan repayment process can be a little quirky. With multiple loans to pay off, most grads are dealing with different lenders, different logins, different due dates. Luckily, these five steps are all you need to get your arms around the process and handle it smoothly. 

No cosigner student loans from Funding U

At Funding U, we make no cosigner student loans directly to college students. We don’t look at your parents’ credit; we look at you, your academic progress, and your financial plan. Apply online.Check out our latest blog posts for tips and useful info about managing money in college, navigating the job market, and more.

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