TUN sits down with Barry Coleman, the vice president of counseling and education programs at the National Foundation for Credit Counseling (NFCC), to discuss tips on how to pay back your student loans.

TUN: Barry, thanks so much for joining us. 

COLEMAN: Glad to be with you today. 

To start off, when will students have to start paying back their student loans? Does it make a difference if they are federal or private student loans?

So, most student loans have a grace period that kicks in when a student graduates, drops below half-time enrollment or just leaves school altogether. 

That grace period is typically 180 days, or six months, on most federal student loans. In reference to private loans, grace periods could vary by lender. Some private student loans require payment as soon as the loan is disbursed while others could have a grace period of up to six months. So, it’s best that borrowers check with their private loan lenders or their loan agreements in order to determine when they have to start repaying those private loans. 

Great. So, what should students do before they graduate, or while they’re still in those grace periods, to make sure that they’re in a position to pay back their student loans once they have to?

Sure. That’s a great question. First and foremost, students should make sure that they understand the terms of their loans. 

They can do that by becoming familiar with the promissory note that was provided when they first took the loan out. If they don’t have the promissory note or they’ve misplaced it, they can ask their loan servicer for a copy of it — be it federal or private loans — in order to become familiar with that. 

Now, the promissory note will spell out all borrower and lender requirements, including the repayment terms. If the borrowers have questions, they should reach out to their servicers for answers. 

Borrowers should also begin to develop game plans for repaying their loans, before payments become due, by gaining an understanding of how these loan payments would fit into their overall budgets. 

I would also say that if borrowers have the ability to make payments of any amount toward their student loans while they’re in school or in a grace period, they should do so. Although this is not required, it will help reduce the balance and save interest charges over the long run. 

Great. Once borrowers do start paying back their student loans, do you have any tips to help them stay on top of things?

Sure. It’s recommended that borrowers pay close attention to their loan balances each month. Typically, their statements will be available online, and this helps to ensure that the payments are being applied accurately and helps the borrower maintain awareness of what they owe. 

Borrowers should also stick to a budget to ensure that they’re able to meet all their financial obligations. This includes repayment of their student loans. 

It’s also recommended that borrowers enroll in automatic debit programs to repay their loans. This will help ensure that the payments are timely each month. With federal loans, they would even save a quarter percent on their student loan interest rate by doing so. So, that’s a great advantage. 

I would also say that borrowers are encouraged to pay as much as they can to help pay off their loans as quickly as possible. The sooner a loan is paid off, the more money a borrower can save, as interest accrues with time. 

In addition, federal student loan borrowers should go to the Department of Education’s website and utilize the repayment simulator tool that’s available. Now, this is a really great tool, and it will allow the borrower to review the various repayment options to determine which is best for their own situation. It not only gives the monthly payment amounts but also will show how long it takes to pay off a loan under a given repayment plan and the total amount of interest the borrower would pay over the life of the loan for each. It’s really an excellent tool. It can be found at studentaid.gov. 

Great. So, for those currently struggling to pay back their student loans, do you have any tips to make things easier? 

Sure. I would say they should start by reviewing their overall budgets to determine if they’re overspending on discretionary items that could be making it difficult to meet their student loan obligations. Look to trim expenses where possible. Oftentimes, there are areas in any consumer’s budget where they might be able to make some adjustments to free up more money. 

Now, if this doesn’t provide enough relief, it’s recommended that they reach out to their loan servicers to discuss their situations, as there may be lower repayment plans available that would help them temporarily while their situations improve. Especially with federal student loans, there are a wide variety of repayment options available. There may be not as many with private student loans. 

However, borrowers should know that if they’re able to lower their payments through a different repayment plan, typically that means that it’ll take longer to repay the loan and be more costly over time. So, that should be viewed as a short-term strategy. As their situations improve, they can certainly change their repayment plans and pay more. 

It’s also recommended that borrowers periodically review their situations to determine when they’ll be able to afford to make larger payments in order to retire their loans quicker. 

Great. So, did we miss anything? Do you have any other tips that you would like to offer borrowers that I did not ask about?

Sure. I would say that, in the event that borrowers are struggling and not able to find solutions to their financial difficulty, they should reach out to an NFCC-certified student loan counselor for assistance.

NFCC student loan counselors are trained to review a borrower’s situation in a holistic manner and to help find solutions to help a borrower get back on track towards meeting their financial obligations. 

Borrowers can reach an NFCC-certified student loan counselor at nfcc.org or by calling 1-800-406-6322. 

Great. Thanks, Barry, for joining us today. 

Happy to do it. Thank you. 

This interview has been edited for clarity.