Graduating soon? How to know when to start paying student loans


Constance Brinkley-Badgett

Constance Brinkley-Badgett

Contributing Writer

Constance Brinkley-Badgett is MediaFeed’s executive editor. She has more than 20 years of experience in digital, broadcast and print journalism, as well as several years of agency experience in content marketing.

Published May 9, 2018|3 min read

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Chances are you’re like most college students with student loans: You don’t have any payments due until after graduation, so you haven’t thought about repaying your loans yet. If your graduation is fast approaching, though, it’s time to start considering how you’ll tackle your loan repayments and when.

Here’s what to consider when determining when to start paying back your student loans.

You have some time...

Most student loans have a grace period of six months after you graduate (or drop out or go below half-time). The interest on your loans will still grow interest just like while you were in school, but you won’t have to worry about making those payments just yet. In fact, if you have a hard time landing a first job, you can defer your repayments even longer.

...but should you take it?

Just because you can delay paying back your loans right away doesn’t mean you should, especially if you have the money. In fact, if you’re still in school or plan to go to grad school, you can start making interest payments to help keep your student loan balance a little lower.

Choose a repayment plan

There are several repayment plans to choose from, so you’ll want to consider your financial situation and goals to choose the right one for you. The federal student aid website has a complete list and explanation of the repayment plan options.

Decide if you should pay extra

But don’t get too caught up in paying off your student loans as soon as you can. While some graduates focus as much of their income as possible toward paying off student loan debt as quickly as possible (and there’s nothing wrong with this if it fits your finances), others take a steady approach, making the minimum payments and investing what they might otherwise put toward larger, monthly student loan repayments.

It’s a good idea to consider which option is best for you. Will money invested now in a retirement account or mutual fund be more advantageous toward your retirement savings? Or your first down payment on a house? Given the way compound interest works, it’s possible, so sit down and crunch some numbers. Better yet, talk to a financial professional. Paying a consulting fee today could make a big difference in your future finances.

Remember: Student loans are ‘good debt’

Unless you got a credit card while in school, made all your payments on time and didn’t run up a big balance, chances are you don’t have a stellar credit score. It’s not that you have bad credit, it’s just that you don’t have much credit history. It’s what is known in the industry as a “thin” credit file. Fortunately, your student loan debt can help.

As long as you’re making on-time payments and don’t default, your student loans will improve your credit scores over time. That’s because the age of your credit accounts plays a significant role when it comes to your credit scores. And a student loan balance doesn’t count against you as much as credit card debt.

Don’t forget forgiveness

There’s no reason to pay back something you may not have to, so it’s wise to check if you’re eligible for student loan forgiveness. There are a wide variety of student loan forgiveness programs available for people working in areas like education or public service, so be sure to see what options may be available to you. You can find more details about student loan forgiveness on the federal student aid website.

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