Repayment Tips for Student Loan Borrowers

For May graduates, student loan repayment begins during November or December following a six-month grace period that is allowed on most federal and private student loans.

Although graduates may understand the value of a college degree, navigating life after college can be overwhelming for many recent graduates. Finding a job, organizing living arrangements and managing finances are just a few of the realities that recent graduates face.

Here are five steps that can help make student loan repayment simpler:

1. Use your six month grace period following graduation to get organized for repayment.

  • Get your documents in order—remember to keep copies of any loan documents you sign. If you will make payments to more than one entity, be sure all your loans are accounted for.
  • Know when payments are due and the amounts.
  • Set up automatic payments to ensure timely payment and protect your credit.
  • If you can, make payments while you’re in school. This will help save you money over time, by reducing the interest that accrues and is capitalized.

2. Consider loan consolidation, but make sure you do your research before signing up. Student loan consolidation may be a good option to consider for students interested in combining multiple private student loans into a new loan with a single monthly payment. Customers may benefit from a lower interest rate and potentially lower monthly payments. Repayment typically begins immediately, even for students still enrolled in school, and although monthly payments may be lower, you may pay more in interest over the life of the loan due to the extended repayment term. Be sure you understand the rate, repayment terms, what additional rate discounts may be available, what the cost is to consolidate and if there are penalties for paying off the loan early. Not all lenders offer the same terms, so be sure to do your research.

3. Understand your repayment options. Keep in mind, for federal loans and Wells Fargo private student loans, there is no penalty for making larger payments than the monthly required minimum or paying off the loan earlier than the end due date. With a standard repayment plan, you pay the least amount of interest over the life of the loan. For federal loan borrowers there are additional repayment considerations:

  • Extended repayment may be based on a fixed or graduated repayment schedule over a period of up to 25 years.
  • With graduated repayment you make lower payments at first, then gradually increase them.
  • An income-sensitive repayment is adjusted annually based on your expected income from all sources.
  • Choosing any of these plans means your payments are less each month, however you may pay more interest over the life of the loan.

Borrowers also may have the option to defer loan payments for an extended period of time, but need to be aware of the interest that accrues when borrowers choose to defer making payments. Below is an example of how much a borrower will pay in interest, by deferring payments for only 12 months. Think of how quickly the interest amount can grow in just a few years.


Student A

Student B

Begins making payments once the grace period has expired and does not go into deferment.

Enters deferment immediately after grace period ends. Deferment period lasts for 12 months.

Amount due at beginning of repayment



Length of deferment/forbearance (in months)



Interest rate on loan



Principal balance due at end of deferment



Repayment term in months (i.e. # of payments required)



Monthly payment



Total payments over life of loan



Total interest paid (from the point at which the grace period ends)



Amount saved by making payments immediately upon entering repayment, rather than choosing to defer or forbear their loan payments.



4. Keep in contact with your lender or loan servicer.

Notify the lender immediately:

  • If you change your name, address, phone number or e-mail
  • If you have graduated from or are going back to school
  • If you can’t make your payments. A new plan may be arranged.

5. Learn more at Wells Fargo Education Financial Services online or call (800) 378-5526. For additional resources on repayment, please see our Repayment Calculator and Interest Savings Calculator.

This entry was posted in After College, Consolidation, Federal loans, Financial education, Paying, Paying for college, Post-college, Private loans, Refinancing, Student loans and tagged , , , , , , , . Bookmark the permalink.

2 Responses to Repayment Tips for Student Loan Borrowers

  1. Anonymous says:

    This is a very helpful post that all students considering a loan should read prior to committing to a loan program. Thank you!

The Student LoanDown

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