6 First Steps Post Grads Need To Take To Pay Off Student Debt

We've finally graduated!Graduates near university are throwing up hats in the air.
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As students everywhere celebrate graduating from college, millions of post graduates are now student loan borrowers who will soon be receiving their first student loan statements. What should post grads prioritize when it comes to paying off student debt?

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GOBankingRates spoke with Sean Fox, president of Freedom Debt Relief and chief revenue officer of its parent company Freedom Financial Network, to learn more about the first steps post grads need to take in order to get organized and pay off their student loans

Know When Your Payments Will Begin

Typically, Fox said there is a grace period of six months after you graduate before you are required to start repaying student debt. If you aren’t sure when your payments will begin, check with your loan servicer. 

Students that graduated with federal student loans may be benefiting from the current pause on federal student payments. This pause, or forbearance, will continue through Aug. 31, 2022. However, Fox said to remember forbearance will not extend or delay your student loan grace period. Once the pause is up, borrowers will be required to make payments on federal student loans.

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See If You Qualify for Existing Loan Forgiveness Programs

While there still isn’t a guarantee that student loans may experience widespread forgiveness, it is possible that your profession may qualify for loan forgiveness. Fox recommends checking in with Federal Student Aid, an office of the U.S. Department of Education, to learn more about types of forgiveness programs and determine whether you qualify due to your job or other circumstances.

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It is possible that you may be starting a job where there are student loan repayment benefits available to you. Some of these benefits may include help repaying student loans with monthly assistance, one-time payoffs or matching funds. Check in with your employer’s HR department to learn more information.

Look Into an Income-Driven Repayment Plan

Some student loan borrowers may be eligible for income-driven repayment plans, which set monthly payments at an amount that is intended to be affordable. Here are a few payment plan options available to student loan borrowers:

  • PAYE: Pay As You Earn
  • REPAYE: Revised Pay As You Earn
  • IBR: Income-Based Repayment
  • ICR: Income-Contingent Repayment
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“All of these plans will cap the monthly payment at 10-20% of monthly discretionary income – along with forgiving remaining loan balances after you make 20-25 years of payments on the loans,” said Fox.

These plans are designed for borrowers who can’t afford their current monthly payments. However, Fox said there are eligibility requirements, including family size and income, loan balance and the type(s) of federal student loans you currently have, that must be factored in when considering if an income-driven repayment plan is right for you and your financial situation. The decision on which is best is an individual one, so take the time to do your due diligence. 

If you aren’t certain which plan is right for you, Fox recommends checking in with your loan servicer. They can run the figures and help borrowers enroll in the best plan. It’s also possible for student loan borrowers to choose this option — request the loan servicer to enroll them in the lowest-payment plan for which they qualify — on an income-driven repayment plan application.

Consider Refinancing

When refinancing, Fox said you will obtain a new loan to pay off your other student loans. The new loan may have a shorter or longer repayment term, or a lower interest rate. 

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Refinancing, however, is only available through private lenders. Fox said borrowers with a government loan should understand that in turning the loan into a private one, all the federal program benefits, like forgiveness, evaporate.

Consider Consolidating

If you are not eligible for refinancing, borrowers may look into consolidating student loans. This groups, or consolidates, multiple loans into one loan. 

Many borrowers will consolidate to move from a variable interest rate to a fixed one, or to change the repayment term. Consolidating may lower the monthly payment, but it may also extend the repayment period. 

“The federal government offers the Direct Loan Consolidation program, but it only groups together federal student loans,” said Fox. “Private lenders, though, can consolidate federal as well as private student loans.”


No matter which types of student loans you’re repaying or what your financial situation looks like, Fox recommends having a simple budget in place. This should include your required loan payments and any other debt, like credit cards, you’re working to pay the balance off. 

Remember that while your budget should focus on achieving short- and long-term goals for what you want in your future, it must incorporate your current financial commitments, like student loans, to ensure these are paid off.

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About the Author

Heather Taylor is a senior finance writer for GOBankingRates. She is also the head writer and brand mascot enthusiast for PopIcon, Advertising Week’s blog dedicated to brand mascots. She has been published on HelloGiggles, Business Insider, The Story Exchange, Brit + Co, Thrive Global, and more media outlets. 

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