Hi there. Congratulations on joining the workforce and having the ability to wake up and drink that cup of coffee in peace. But sorry for you as well, because you will get a letter from Sallie Mae congratulating you on that fact. Let us face it – dealing with the first payment is going to be as uncomfortable as untangling your earbuds in complete darkness. But if you deal with your finances now, you are going to enjoy the rest of the month, without thinking about anything else.
The repayment period has come and the grace period has officially expired. Can you imagine how it feels to return from a holiday, where you had to pay all of your expenses twice?
Firstly, look for your loans. Whereas the federal ones will wait for you on the official website of the Department of Education StudentAid.gov, you still have to find the website of your loan servicers (Aidvantage, Mohela, Nelnet and so on). In case you have borrowed from any of the private lenders (SoFi, Sallie Mae), search for the portal address in your email. Ignoring your bill is not an option – it is still going to wait for you.
Secondly, setup your autopay. Yes, it is a lazy option but it is also a smart one, as it gives you a 0.25% interest rate reduction from most of federal and private loan lenders for participating in the program. This way, your on-time payment actually pays itself. Make sure that your checking account has enough funds, so you won’t overdraft. This is not hard to do.
Now what is about the amount of your monthly payment? Paying the minimum amount of money is great, but it will not help you much, as it keeps you account current, but it does not help you to cover your interest rate, which continues accruing on your balance. However, in case you are able to add $50 to your monthly payments, let your servicer know that you want this money to go towards the principal of your balance.
Sometimes, you can face the problem of Income Driven Repayment (IDR). It changes your monthly payments according to your income and reduces your total costs significantly. However, IDR increases your interest rate, which may be disadvantageous in the future. So choose wisely. ⚖️
Watch out for the interest capitalization of your loan. In case you deferred your loan when you were in university, the entire interest, which was accrued during this period, was capitalized and added to your principal. It is annoying, but better to know it than wonder about the increase of your balance.
In case you work in the non-profit organization or government agency, you need to look for the options of eliminating your loan through the program of Public Service Loan Forgiveness. You will have to fill in some papers, but after 10 years of working in this program, you will not owe anything anymore.
However, be careful with your federal loans. In case you refinance your loans into private ones, you will lose all access to the programs of eliminating your loans and Income Driven Repayment forever.
Well, dealing with your loans is just another aspect of your adult life. Finally dealing with the first monthly payment will relieve you of all your worries. Just do your job and give yourself a cup of coffee as a gift for making this transaction.