For some federal student loan borrowers who graduated in May, the time has come: It’s the end of your loan repayment grace period.
If you’re about to start shelling out monthly loan payments, just started or are hoping to aggressively tackle your debt, there are a lot of things to do before you start transferring money.
1. Get a Grip on the Basics
Let’s start with the fundamentals of loan repayment: You owe a certain servicer a minimum amount of money at the same time every month. Make sure you know how all that works. You should have received notification from your student loan servicer, but if you’re not sure who you’re supposed to pay, you can access your federal loan information in the National Student Loan Data System. It’ll tell you who you owe. Private student loans won’t be found in that database, but will likely show up on your credit reports with information about the lender so you can contact them.
Make sure you understand exactly what you’re required to pay each month and your payment due date. Jodi Okun, founder of College Financial Aid Advisors and Discover Student Loans Brand Ambassador, recommends organizing your student loan information in a document and setting up calendar reminders for when the payments are due. Look into automatic payment options with your servicer, as well, but you’ll still want to make sure the payment goes through every month. Forgetting about it could accidentally lead you to miss a payment.
2. Figure Out What You Can Afford
As a new graduate, you may be dealing with more life expenses than you have in the past, or you might still be in search of a job you want. Paying your student loans needs to be a priority, because once you fall behind, it can be very difficult to catch up, and missing loan payments will seriously hurt your credit score. You can see how your student loan payments affect your credit score from month to month by getting two of your scores for free on Credit.com.
If you’re concerned about being able to afford your payments, look into student loan repayment options. Federal loan borrowers are often eligible for income-based repayment or loan forgiveness. The application process might take a few months, said John Collins, managing director for GL Advisor, a student loan debt consultancy. Servicers are dealing with a lot of repayment program applications this time of year, so it could take you 60 to 90 days to enroll, Collins said. In the meantime, make sure you can afford your payments.
3. Make a Plan
You may hate the idea of paying debt off over the course of a decade, racking up interest along the way, but before you decide to throw as much money as possible at your debt, consider your entire financial picture.
“What we’ll recommend to everybody is right out of school, limit your required payment as much as possible,” Collins said. “They need to have an emergency savings fund in case something happens. That should be a goal before you start paying down debt.”
Once you have enough socked away to cover three to six months of expenses, then you can consider upping your loan payments, though you’ll want to make sure you won’t incur penalties and your extra payment goes toward the principal loan balance.
Figure out if you want to consolidate or refinance your student loans and what it would take for you to qualify. There are a few companies offering competitive refinancing rates for private loan borrowers with qualifying credit histories, and that could save you a lot of money in the future.
Federal loan borrowers have some decent options for making payments affordable, and all it requires is a little planning. For example, when you’re gathering documents to prove your income level, make sure you’re providing the most accurate information — your earning situation may have changed drastically since you filed your taxes — so your loan repayment is accurate, Collins said.
“Ultimately I think borrowers have a great opportunity to reduce their debt payments through the federal loan repayment options,” Collins said. “A lot of people recommend eating only Ramen, and live in a studio apartment, and only buy toilet paper if necessary. You should never feel that pressure. Use the many tools that are out there, educate yourself on what they are, and if you need help, there are plenty of resources out there.”
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This article originally appeared on Credit.com.