Your Guide to Preparing for and Making Student Loan Payments


In October 2023, student loan repayments began after a three-year gap for more than 40 million borrowers. 

If you or a loved one are among those 40 million, there’s a good chance you need ways to manage your student loans while safeguarding your financial security. 

Take a deep breath, and realize that you are not alone. Millions of Americans are taking charge of their student loans, and you can, too. With some planning, you can approach your student loans intelligently and develop a strategy for freeing yourself from debt.

Getting Started with Student Loans: Navigating the Terrain and Locating Crucial Information 

If you need to prepare for student loan payments, make a list of your student loans and the relevant terms, such as how much you have left to pay and the loan interest rate. 

This shouldn’t be hard to find. Most student loan underwriters, from companies such as Sallie Mae to student loan servicing companies such as MOHELA and Nelnet, make it easy to understand the terms of your loan and arrange for payments. By logging into your student loans portal, you should be able to find this information. 

Pro tip: Check your inbox. These servicers have sent emails to prepare borrowers for repayment. 

As you set up accounts with your loan servicers, verify the details of your loans. What is the total amount of your student loan debt, and what are the monthly payments? Have your payments changed since 2020? 

While most federal student loans have fixed rates, loans from banks, credit unions, and private lenders can offer variable-rate loans so that the interest adjusts according to the prime rate. Some loans also have a graduated payment schedule that increases payment amounts over time.

Also, determine when you must start paying back your loan. Depending on what you do for a living, if you are unemployed, or if you are eligible for the Saving on a Valuable Education plan—a recent federal initiative rolling out new income-based student loan repayments—you may be able to defer your payments or qualify for an extremely low payment plan.

Budgeting for Student Loans: Strategies for Prioritizing Financial Health

When you have a list of your monthly student loan payments, you can create a repayment plan that fits into your household budget. Include student loans in your budget like you would rent, utilities, groceries, or other monthly expenses.

As you create your budget, you want to determine how much money to put away for loan payments and where to put it. Automatically withdrawing loan payments from your bank account can be convenient, but you must keep enough money in the account so it’s not overdrawn when the loan payments come due. Consider using a savings account to save your student loan money, and set up a scheduled funds transfer to your checking account to cover the loan payments. 

You should also explore other options for putting money aside, such as credit cards that earn cash and plans such as the iQ Credit Union Easy Saver, which rounds up transactions and places the difference in savings.

Tips for Reducing Your Student Loan Debt

As your career starts to take off and you earn more money, consider paying off or restructuring your student loan debt. Here are some ideas:

Weigh the pros and cons of the debt avalanche approach and snowball approach

If you want to pay down your loans faster, you can adopt the avalanche or snowball strategies. With the debt avalanche, you pay a little more than is owed each month on all your loans, starting with your highest-interest loan, which should reduce the amount of interest you pay in the long run. With the snowball method, which may feel a little more balanced, you choose the smallest loan and concentrate on paying that off, then move to the next smallest loan.

Consider refinancing your student loans. 

There are dozens of companies out there that will refinance your student loans so that you can lower your payments or pay less interest. However, be sure of the loan terms and that you will save money before committing.

Think about consolidating your student loans. 

If you have more than one student loan, combining them into one loan payment may be a good idea because it might save you interest or lower your monthly payments.

See if your job or a job you’re interested in offers student loan forgiveness. 

Some professions offer student loan forgiveness, such as teaching, nursing, various medical professions, and public service jobs. Military service and employment at a federal agency also offer student loan forgiveness.

Managing student loan debt may be a piece of financial wellness that we’ve been able to hit pause on for some time, but now that it’s back, it’s time to focus on strategies that will allow you to thrive financially while making your required payments. 

Just know this: Learning how to manage student loan payments along with your other financial obligations is a skill that has to be acquired; it doesn’t come naturally. 

Remember that your friendly neighborhood financial literacy advocates at iQ can always support you with relevant information and timely advice. To get started, be sure to download our Financial Survival Guide.


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