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Top 4 Things to Know About Your Student Loans

Having to start paying back your student loans is definitely not fun to think about, but, unfortunately, it will happen. By getting familiar with your loans now, you’ll know all the tips and tricks to handle everything properly.


With the overall student debt in the country at more than $1.5 billion, and the average student leaving college with $28,650 in debt in 2017, you’ll want to know how to minimize your own debt and the hassle of paying it post-graduation. You should make sure that you are receiving the best rates and service while being aware of your repayment options and the potential programs you can qualify for. Here are some of the top things to know when it comes to your student loans.


Find the Best Private Loans

Ideally, you won’t have to take out private student loans. However, many students use private loans when federal loans fail to meet their financial needs. If you have taken out or need a private loan, you should always research the best options rather than just going with a lender you know. Even if you had a private loan from a certain company one year, you can always take out a loan with another lender if the rates were too high or you have better credit to qualify for a better lender the next year. Keep in mind that when you take out a private loan, you won’t have the same protections and repayment plans as you do with federal loans.


Know Your Loan Servicer

Your loan servicer is arguably your most important point of contact when you start paying off your student loans. Once your student loans are disbursed, the loans will then be sent to another company to be serviced. You will need to make your payments, change your repayment plan and apply for deferment and forbearance, if necessary, with your student loan servicer. Unfortunately, you can’t choose your student loan servicer for federal loans. You will be assigned a loan servicer, which will most commonly be Navient, Nelnet, Great Lakes or FedLoan. With private loans, you can’t choose which servicer they use, but you can check reviews on the servicer they use before applying.


Check Out Your Repayment Options

Your federal loans will automatically be put into a standard repayment plan, in which you make monthly payments to pay off your loans within 10 years. If this plan doesn’t work for you, you have other options to explore, including income repayment plans—where your payment is 10%-15% of your income—and extended repayment, to pay off your loans in 25 years with lower monthly payments. Generally, you will pay the least amount of interest with the standard repayment plan, but sometimes it’s difficult to make those payments, and if you use an income-repayment plan, your loans will be forgiven after 20 to 25 years. For private loans, your repayment options will depend on your lender, but several lenders allow you to start making payments while in school.


See If You Qualify for Tax Deductions

In most cases, some of the interest you paid on your student loan payments during the tax year is tax-deductible. This means you can get back some, if not all, of your interest payments for the year, up to $2,500 or the amount of interest you actually paid, depending on which is less. To be eligible, you must have paid interest on a qualified student loan in the tax year, be legally obligated to pay on the loan, have the filing status of not married or, if filing jointly, you cannot be claimed as a dependent on someone else’s tax returns. Single filers must have an income under $65,000 to qualify for the full tax deduction and up to $80,000 for any deduction (under $135,000 and up to $165,000 for joint filers). Incomes above these amounts won’t qualify for any deduction.


If you follow these tips and pay your loans on time, your student loans process should go smoothly and, hopefully, you’ll even receive some tax deductions. It may not seem like much now, but in the near future when you have a bunch of bills to pay, having a lower student loan bill will make a huge difference.


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