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10 Tips for Paying Off Student Loans

1) Know Your Loans It’s important to keep track of the lender, balance and repayment status for each of your student loans. If you’re not sure, ask your lender or visit www.nslds.ed.gov. Contact your school if you can’t locate any records.

2) Know Your Grace Period A grace period is how long you can wait after leaving school before you have to make your first payment. It’s six months for Federal Stafford Loans, but nine months for Federal Perkins Loans. The grace periods for private student loans vary. Don’t miss your first payment!

3) Stay in Touch with Your Lender Whenever you move or change your phone number or email address, tell your lender right away. Open and read every piece of mail — paper or electronic — that you receive about your student loans.

4) Don’t Panic If you’re having trouble making payments because of unemployment, health problems or other unexpected financial challenges, remember that you have options for managing your federal student loans.

5) Pick the Right Repayment Option When your federal loans come due, your loan payments will be based on a standard 10-year repayment plan. If the standard payment is going to be hard for you to cover, there are other options. To find out more about Income-Based Repayment and related programs and how they might work for you, visit IBRinfo.org.

6) Lower Your Principal When you make a federal student loan payment, it covers any late fees first, then interest, and finally the principal. If you can afford to pay more than your required monthly payment, you can reduce the amount of interest you have to pay over the life of the loan.

7) Stay out of Trouble For federal loans, default kicks in after nine months of non-payment. When you default, your total loan balance becomes due, your credit score is ruined, the total amount you owe increases dramatically and the government can garnish your wages and seize your tax refunds if you default on a federal loan. Talk to your lender right away if you’re in danger of default. You can also find helpful information at studentloanborrowerassistance.org.

8) Pay Off the Most Expensive Loans First If you’re considering paying off one or more of your loans ahead of schedule, or trying to reduce the principal, start with the one that has the highest interest rate. If you have private loans in addition to federal loans, start with your private loans, since they almost always have higher interest rates and lack the flexible repayment options and other protections of federal loans.

9) Consider Consolidation You can combine multiple loans into one for a single monthly payment and one fixed interest through the Direct Loan Program. For private consolidation loans, shop around carefully for a low or fixed interest rate if you can find one, and read all the fine print. Never consolidate federal loans into a private student loan — you’ll lose all the repayment options and borrower benefits, like unemployment deferments and loan forgiveness programs, that come with federal loans.

10) Loan Forgiveness There are other federal loan forgiveness options available for certain professions, as well as some state, school and private programs. Learn more.

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