When the time comes to repay your student loans, you may be faced with a lot of questions you didn’t expect. Understanding the type of loans you have—and seeing through some common misconceptions—can make the repayment process significantly easier. Let’s look at three common student loan scenarios that may help you navigate your new payments with ease.

1. You receive your first statement and your monthly payment is way more than you expected—and more than you can afford.

   
   Often, borrowers feel like they’re in trouble before they even begin repayment. If you didn’t elect a specific payment plan when you left school, your loans automatically go into the standard repayment plan with equal monthly payments over a 10-year term. The good news is, there are many repayment plans available, which can make your monthly payments fit your budget. Whether you have federal or private student loans (or both), you should contact your loan servicer(s), who can walk you through the options available. Repayment plans can be based on your income, or even include refinancing, which puts all your student loans under one monthly payment, often with a lower interest rate.
   
   

2. You have some extra money that you’d like to put toward paying down your loans, or even paying them off early, but you don’t want to get hit with the fees and penalties you’ve heard come with it.

   
   You cannot be penalized for paying your federal loans off early, and most private loan servicers don’t charge for pre-payment either. In fact, by making payments that are above the minimum, or even making extra payments, you’ll actually save on interest, which saves you money over the life of your loans.
   
   If you have private loans and you’re unsure if there’s a prepayment fee, it is always best to ask. Checking in with your servicer also means they can help you figure out the best way to ensure that your extra dollars are getting allocated toward the correct loans, and that the payments are going toward the principal balance of the loan.
   
   

3. You have questions about your loan, or are struggling with payments, and aren’t sure what to do. You’ve always heard that student loan servicers aren’t very helpful.

   
   Student loan servicers are trained, knowledgeable experts in student loans and are there to help. In addition to accepting payment and ensuring that it gets to the right place at the right time, servicers can help you if you’re struggling to make payments, can help you set up automatic payments, and can help answer any other questions that you may have. They’ll also send you useful emails and occasionally call to give you information about your loans.

Don’t let repayment scare you. The more informed you are about the loans you’re repaying, the easier it will be to pay your loans back on time, and to set yourself up for a smart financial future.

iGrad has partnered with Elements Financial to bring their financial capability services to our members. iGrad is 100% focused on empowering folks to make effective personal finance, student loan and career decisions throughout life. Learn more at igrad.com.

This information is provided for informational purposes only. It does not constitute legal, tax or financial advice. Consult with your tax, legal or financial adviser before taking any action.