Managing Student Loans

Updated December 1, 2022

A standard repayment plan typically allows students to pay less than other plans. There are two types of forbearance: general and mandatory. is an advertising-supported site. Featured or trusted partner programs and all school search, finder, or match results are for schools that compensate us. This compensation does not influence our school rankings, resource guides, or other editorially-independent information published on this site.

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Roughly a third of adults under age 30 face student loan debt, according to the Pew Research Center. While students owe varying amounts, the average college graduate leaves school with $34,000 in student loans. Today's college students are more likely to graduate with student loan debt and in larger amounts, which can affect their future financial stability.

However, while students must manage the long-term effects of graduating with debt, the ability to borrow money has allowed many learners to attend college. This guide provides an overview on managing student loan debt, including information on student loan forgiveness and student loan consolidation.

Repaying Federal Student Loans

Repaying federal student loans involves understanding how they work and the various factors involved in repaying them. Students should determine who services their loan, the length of their loan grace period, the date when repayment begins, and their interest rate.

A loan servicer is a company that manages the billing and other services of a federal student loan. This company provides repayment plans, loan consolidation options, student loan forgiveness programs, and other assistance as students begin repaying their loans.

Students should never pay a company to help with their loans since loan servicers provide all services for free. Borrowers receive a loan servicer upon disbursement of the first loan payment. Students who are not contacted by a loan servicer can determine their loan servicer by contacting the Federal Student Aid Information Center.

For most federal loans, students receive a grace period of six months after leaving school to begin their payments. This grace period allows students to adjust to their professional lives and select an appropriate repayment plan.

However, not all loans grant this grace period and some loans may grant a longer one. For instance, the Perkins Loan features a nine-month grace period. Students should understand their interest rates and research their specific loan to determine when their loan payments begin. The loan servicer gives borrowers a loan repayment schedule that notifies them when their payments are due and the amount due.

Students who cannot make their loan payment should contact their loan servicer immediately. The loan servicer can provide options and help borrowers navigate next steps, whether that means changing the repayment plan, deferring payment, or applying for forbearance.

  • Change Your Repayment Plan

    Students typically receive a standard repayment plan when their loan first comes due. However, they can change their repayment plan at any time for free. Standard repayment plans set payments at a fixed amount that ensures borrowers pay off the loan in 10 years.

    Several federal loans are eligible for a standard repayment plan, including direct subsidized and unsubsidized loans, subsidized and unsubsidized federal Stafford Loans, all PLUS loans, and all consolidation loans.

    A standard repayment plan typically allows students to pay less than other plans. However, borrowers should still explore other repayment plans, including the graduated repayment plan, extended repayment plan, revised pay-as-you-earn repayment plan, and income-sensitive repayment plan. Students' loan servicers can provide more information, as not all borrowers qualify for each of these repayment plans.

  • Defer Payments

    Borrowers who cannot make loan payments can research deferring payments. With deferment, students do not need to make payments, but they also delay their progress in paying off the loan or working toward loan forgiveness.

    Students who receive deferment may still need to pay interest that accrues during the deferment period, which varies by loan. For example, borrowers with direct subsidized loans do not need to pay interest that accrues during a deferment period, while students with direct unsubsidized loans must pay this interest.

    To request a deferment, students must submit a form to their loan servicer along with documentation that they meet loan deferment eligibility requirements. These requirements include undergoing cancer treatment, experiencing economic hardship, enrolling in a graduate fellowship program, enrolling at least half-time in college, and being on active military duty or post-active duty.

  • Apply for Forbearance

    Loan forbearance also allows students to temporarily stop making payments or make smaller payments. There are two types of forbearance: general and mandatory. General forbearance is sometimes called discretionary forbearance because the loan servicer decides whether or not to grant it. Students can request a general forbearance if they cannot make their monthly payments due to financial difficulties, medical expenses, or an employment change. A general forbearance is granted for no more than 12 months at a time.

    On the other hand, if a student qualifies for mandatory forbearance, the loan servicer must grant it. Eligibility criteria include serving in an AmeriCorp position, qualifying for a partial repayment of loans under the U.S. Department of Defense Student Loan Repayment program, serving in a medical or dental internship or residency program, serving as a member of the national guard, or qualifying for teacher loan forgiveness.

Repaying Private Student Loans

Private student loans do not feature the same loan repayment plans as federal student loans and often vary depending on the loan provider. Borrowers should thoroughly research their specific loans and available repayment options.

When repaying private loans, students should ensure that they understand their interest rate, when their repayment period starts, and whether there are forbearance or deferment options. Knowing this information can then help them make informed decisions.

Private loans often differ from federal loans in deferment periods, with some private loans requiring students to begin making payments while they are in school. Some companies may offer in-school payment assistance options that allow students to temporarily postpone payment. However, these options may include conditions, such as a higher total loan cost. Students should always understand exact terms.

How Do Private Loans Measure Up?

Before committing to any type of loan, students should understand the rules and requirements of each. This is especially true of private loans, which do not offer the same backing or transparency as federal options. Read below for some of the most important differences to understand when it comes to federal versus private loans.

Credit scores

Credit scores

The U.S. Department of Education only requires a credit check for PLUS loans. Private loans, conversely, often require an existing (and passing) credit score for individuals to receive money, which means students may need a cosigner.

Repayment plans

Repayment plans

While federal repayment plans do not start until after a student is no longer in school (or is attending on a less than part-time basis), many private plans require payments while students are still enrolled.

Interest on principal

Interest on Principal

Interest rates on federal loans are fixed for the lifetime of the loan, while private organizations may have variable rates.

Repayment flexibility

Repayment Flexibility

Unlike federal loans that offer options such as deferment or forbearance, private lenders are typically less flexible or willing to provide options to students who cannot make payments.

Debt Loads and Mental Health

Facing a huge debt load can become a very stressful situation – especially when new grads are trying to find a job and start their careers. Mental health issues for recent college graduates have shot up significantly in recent years, with the most common manifestations including depression, anxiety, anger and extreme stress.

In addition to daily responsibilities, today's borrowers now face serious questions of whether they'll ever be able to purchase a car or home, and if they can really justify a vacation when so much money is still owed to lenders.

Reckoning with how to repay the money you've borrowed is enough to keep anyone up at night, but there are many ways for individuals with student loan debt to take control of their lives. It can feel harrowing at times, certainly, but it's important to ensure you're taking good care of your mental health at every turn.

One of the best ways of moving forward constructively is to research and fully understand the different options available to you. If your monthly payment is taking up too much of your income and creating stress in other areas of life, talk to a loan officer about a different payment plan. If unexpected life events mean you can't make payment for a couple months, seek deferment or forbearance. Whatever your life situation, know that there's a way to find relief and balance.

Managing Loans and Stress

Many students feel overwhelmed by their student loan debt or confused about how to repay their loans. Repayments typically start as students start their professional lives and begin working full time. See below for some steps to help you feel more confident and less anxious while navigating the loan repayment process.

  • Understand Your Loans and What You Owe

    Understanding your loans can help ease anxiety around how much you owe and how to navigate the repayment process. Many students take loans from multiple sources. They should research all of their loans, including the difference between federal loans and public and private loans.

    Students can also create a loan repayment tracker to help keep track of exactly how much they owe in student loans at any given time. This is especially helpful for students who receive loans from multiple sources.

  • Think About Consolidating Your Loans

    Consolidating student loans is essentially like refinancing. The process can help students lower monthly payments, avoid defaulting on a loan, or reduce their interest rates. Students with loans from multiple sources may combine them into a single loan with a fixed interest rate based on the average of interest rates of the loans being consolidated.

    For instance, a direct consolidation loan allows students to combine multiple federal education loans into one loan at no cost. Students must complete a loan consolidation application and promissory note. Borrowers should also research the pros and cons to consolidating any non-federal loans as the process varies from private loans.

  • Create a Cushion

    Students should plan to save for their loan payments even before their first loan payment is due. This helps create a cushion in case of future financial hardship. Since many student loans do not require payments until six months after graduation, borrowers can often save money for months as they begin working full time.

  • Focus on High-Interest Loans

    Paying off high-interest loans first helps students save money in the long run. Loans with higher interest rates accumulate more interest and faster, so the sooner students can pay them off, the less they pay overall.

    Using the debt snowball method, borrowers with multiple loans pay off the debts with the smallest balance first while making minimum payments on the accounts with larger balances. Borrowers can apply this method to student loans based on interest rate, paying down high-interest loans first while making minimum payments on loans with lower interest rates.

  • Pay Extra

    Another way to avoid paying more in interest in the long run is to make more than the minimum payment each time. By paying a little extra each month, borrowers can reduce the total amount they pay and pay off the loan faster. Paying extra one month also reduces the amount due for the following billing statement. Saving ahead of time can help borrowers make larger payments during each payment period.

  • Research Loan Forgiveness

    In certain situations, borrowers can have their loans forgiven, cancelled, or discharged. For instance, borrowers who work as government or nonprofit employees may be eligible for the Public Service Loan Forgiveness program, which forgives the remaining balance of their federal direct loan after they make 120 payments.

    Teachers may qualify for the Teacher Loan Forgiveness Program. Several other circumstances may result in loan forgiveness or cancellation, so borrowers should research their options. While more common with federal loans, other loans may also offer forgiveness programs.

  • Set Up Auto-Pay

    Scheduling automatic payments is another way to help reduce stress around loan payments. Students can contact their loan servicer to set up auto-pay, which allows them to stay consistent with their payments and avoid late fees and other penalties.

    Borrowers should ensure that their account contains enough money to cover the automatic payments. They can even set the payments to slightly higher than the minimum amount due if they want to pay off their loan faster without thinking about it every month.

Consolidating Your Loans

Rather than making multiple monthly payments that take time and energy, borrowers can consolidate their loans so they make one simple payment to a single lender. Most federal loans allow consolidation while most private loans do not offer this option. Borrowers with private loans can talk to their lenders about refinancing possibilities.


  • Consolidated loans allow borrowers to make one monthly payment rather than several.
  • The fixed interest rate is found by averaging the existing rates and rounding up by one-eighth of a percentage, meaning students may end up with a lower overall rate.
  • Like unconsolidated loans, borrowers still have access to multiple repayment options.
  • Students who struggle to repay their loans in the given time frame can receive an extension so the monthly payment becomes lower.
  • Under consolidated loans, borrowers can schedule a monthly automatic debit from their account, thereby saving time and improving their credit score from making on-time payments.


  • Borrowers can only consolidate loans once, meaning that even if the interest rate drops, their rate remains the same.
  • Because consolidated loans typically last longer than the standard 10-year loan, borrowers likely end up paying more in interest over the life of the loan.
  • Some loans, such as the Perkins, allow for certain individuals to receive loan forgiveness. Any types of benefits offered under the original loan terms go away once multiple loans are consolidated.
  • Consolidated loans do not offer the standard six-month grace period for repayments after a student graduates, so if borrowers consolidate immediately after leaving school, payments are immediately due.
  • Students who enjoyed any special repayment provisions, such as lower interest rates, under their old plan will lose them once the loans are consolidated.

Refinancing Your Loans

Although not as common as forbearance, deferment, or consolidation, refinancing is another option for student loans. Borrowers should note that while only federal loans can be consolidated, both private and federal loans qualify for refinancing.


  • Average federal loan interest rates hover between 4-7%, while federal loans are typically between 9-12%. By refinancing, however, students may be able to get a significantly lower interest rate.
  • Refinanced loans often offer a lower monthly payment than the original loan, thereby making it easier for borrowers to maintain their payments.
  • For borrowers with a private loan that required a cosigner, refinancing often means they can release the cosigner from their responsibilities.


  • Longer repayment plans often negate the benefits associated with lower interest rates, as students end up paying more in interest during the longer lifespan of the loan.
  • Refinanced loans do not offer any type of forgiveness, regardless of the chosen career. In fact, refinanced loans are still due even if the borrower dies, meaning any remaining funds must come out of their estate.
  • Unlike standard federal loans that can enter deferment or forbearance, refinanced loans offer no time off from payments, regardless of circumstances.

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