How to Start Paying Off Your Student Loans

Jul 11, 2022 4 min read

Throughout school it’s easy to push off the thought of student loans as something you will deal with in the future. The time has finally come, you’re currently pursuing your career interests and your student loan payments are about to begin. Here’s a breakdown on how you can pay off student loans and organize your finances.

1. Know How Much You Owe

Knowing how much you owe in student loan debt can take a bit of digging. If you only have federal loans, you can find this information by logging in or creating an account on the Federal Student Aid website. Once logged in, you can view the total amount you owe, the type of loan it is, and the interest rate.

If you have private loans (think credit unions, banks, etc.), you’ll need to login to your account through your lender’s website to view loan details. Once you’re able to view all loans, make sure you:

  • Total the amount of all loans
  • Note interest rates on each loan
  • Find when payments begin
  • See how much your monthly payment is

2. Use the Grace Period

Most federal loans give a 6-month grace period after you graduate, leave school or drop below half-time enrollment. Keep in mind that interest can still accrue during this time, but a monthly payment isn’t yet due.

A grace period for your private loans may or may not be available depending on your lender. If they do offer a grace period, it doesn’t hurt to take advantage of it to allow you to either save money for an emergency fund or use this money on another private loan that may not have a grace period or has a higher interest rate to help you knock down the principal amount.

3. Understand Your Student Loan Repayment Options

How long it takes to pay off your student loans depends on which repayment plan you choose and the repayment term. Below are the most common repayment plans for student loans.

Standard Repayment Plan

A fixed monthly amount you pay each month with a set interest rate and amount of time, most commonly for 10 years but up to 30 years if you have a direct consolidation loan.

Graduated Repayment Plan

If you expect your income to steadily increase over time, a graduated repayment plan may be right for you. This plan slowly increases your monthly bill every two years, with the goal that payments are made for 10 years (possibly up to 30 years if you have consolidated loans).

Extended Repayment Plan

You could qualify to extend your student loan repayment plan from 10 years to 25 if you have more than $30,000 in federal student loans.

Income-based Repayment Plan

The income-based repayment plan determines what your monthly payment is based on your current income and family size. There are four different income-driven repayment plans available:

  • Revised Pay As You Earn Repayment Plan (REPAYE Plan)
  • Pay As You Earn Repayment Plan (PAYE Plan)
  • Income-Based Repayment Plan (IBR Plan)
  • Income-Contingent Repayment Plan (ICR Plan)

Loan Consolidation

Juggling several loans with various lenders and interest rates can be confusing and discouraging. One way to organize your finances (and maybe get a lower interest rate) is to consolidate your student loan debt. This can be done by taking out a loan with a fixed interest rate in the total amount of your student loans, paying off all lenders and leaving you with only the one loan in the total amount of your student loans. This now gives you the convenience of only needing to make one monthly payment, although larger, rather than multiple payments for lower amounts.

The goal is to get a better interest rate than the ones you currently have. This can be easier to achieve when you have a high credit score, although if you have a lower credit score you may still be able to secure a new loan, but at a higher interest rate.

4. Create a Plan for Student Loan Repayment

The best way to pay off student loans starts by creating a budget. By utilizing financial planning tools and tracking your expenses and income, you can calculate approximately how much you can put towards your student loans each month. Be sure to look into the terms of your loans before you consolidate, as some programs may not be available after consolidation.

5. Pay Extra and On Time

No one enjoys paying off student loans, and many want to figure out how to pay off student loans as quickly as possible. If you have extra money at the end of the month you can make an extra payment on your student loans which goes directly to the principal amount (after all interest is paid). Doing so chips away at the amount you owe and will help lower the interest accrued each month.

Are you debating how you want to spend your tax refund? It may not be the most exciting option but putting this amount towards your student loans could make a large dent in what you owe and can be a big step towards financial freedom.

6. Look Into Options for When You Can't Pay

If you’re struggling to make student loan payments, there are several options you may consider.


If you’re going through financial hardships, you may qualify to defer student loan payments for up to three years.


If you’re not wanting to defer or don’t qualify, you may qualify for student loan forbearance that can reduce or postpone student loan repayment for up to one year.


Qualifying for student loan cancellation is difficult to do, but in certain circumstances can forgive or reduce your debt.

7. Take Advantage of Tax Benefits

If you meet all eligibility requirements, you can deduct up to $2,500 on your federal tax return based on the amount of interest you’ve paid on student loans.

Consult with an Advisor

The path to financial freedom can come with twists and turns. Consider talking with a financial advisor to discuss the best roadmap for your financial journey.

Want to learn more?

Contact a local FBFS agent or advisor for answers personalized to you.