5 steps to prepare for student loan repayment

By Erin El Issa | NerdWallet

Federal student loan repayment resumes in the coming months — interest begins accruing in September, with payments starting in October — after a 3½-year payment pause. According to a new NerdWallet survey, most federal student loan borrowers (88%) didn’t make payments during the pandemic forbearance. If you’re one of these borrowers, here are five steps to prepare for repayment.

1. Know your details

According to the survey, nearly half of federal student loan borrowers (46%) don’t know how much student loan debt they currently have, and 57% don’t know who their loan servicer is. Close to a third of federal student loan borrowers (31%) aren’t sure what their interest rates will be when forbearance ends, and 27% aren’t sure how to make payments at that time.

If you don’t know who your student loan servicer is, log in to the Federal Student Aid website using your FSA ID (you can create one if you don’t yet have one). On the left, you’ll see your total balance, and on the right, your loan servicer(s). You can make payments on your loan servicer’s website, as well as find interest rate information. Because of the payment pause, interest rates might only appear as 0%, but your issuer website(s) should tell you when loans were disbursed, and you can look up the rates on the FSA site by disbursement date(s).

2. Decide on a payment plan

The standard repayment plan is 10 years, and if you can afford the payments, this is probably the best choice to minimize interest costs. However, there are other repayment plans that can lower your monthly amount owed. The survey found that 60% of federal student loan borrowers don’t know what options they have for payment programs.

For many, an income-driven repayment plan will be a good choice to lower your monthly cost by capping payments at a percentage of your discretionary income and forgiving the remainder after 20 or 25 years of payments. The Biden administration is also rolling…