5 Money-Saving Tips For When Your Student Loan Grace Period Ends

It’s that time of year again, when the leaves change, the weather turns a bit colder and summer vacation seems like a distant memory. And if you graduated from college or an advanced degree program last spring, your student loan vacation is over, too.

It may seem impossible that six months have passed since you left school, but nevertheless you’ve probably received a notice or two in the mail informing you that your student loan grace period is coming to an end. It’s officially time to deal with your debt—no small feat when the average undergrad borrower owes more than $37,000 and the median number for graduate and professional degree borrowers is often closer to $60k .

Regardless of how much you owe, if you want those loans off your plate as quickly—and inexpensively—as possible, you’re going to need a solid plan. If saving money (or at least not overspending) is a priority for you, here are five steps you can take to help put your student loan repayment strategy on the right track.

1.  Getting organized
If you’ve got more than one loan from multiple sources (as many borrowers do), you may want to consider pulling them all together. You can track down your federal loan details using the National Student Loan Data System (NSLDS). For private loans, your best bet is gathering statements, calling the loan servicer, or talking to your school’s financial aid office to help find the information you need.

Once you know what you owe, it’s helpful to store it all in one place so you can easily see info like interest rates and terms, track your progress and make decisions based on the big picture. Excel addicts should love this step, but the rest of you can use a free student aggregation tool .

These platforms house all of your student loan data under one roof and provide tools to help optimize your repayment approach—for example, allowing you to compare refinance options and test prepayment scenarios, both of which can be cost-cutting strategies. You can also use SoFi’s student loan payoff calculator to get an idea of when you loan payoff date might be.

2.  Knowing your options
Federal loans offer a number of repayment options ranging from income-driven plans like Pay As You Earn (PAYE), to graduated repayment plans where borrower payments increase over time.

So how do you choose the right plan for your situation? A general rule of thumb is that the lower your payments are, the longer it will take you to pay off your loan and the more money you’ll spend on total interest. If saving money is your biggest concern, you’ll likely want to choose the most aggressive plan that your financial situation will allow.

3.  Choosing wisely
As motivated as you might be to pay off your loans ASAP, something you should try to avoid is picking a plan that could get you in over your head. Missing even one loan payment can potentially have an impact on your credit score . This, in turn, may affect your future ability to refinance student loans and achieve other important financial goals. Federal loans also offer income-contingent repayment plans and tools like forbearance and deferment for a reason—benefits that private student loans generally don’t offer—so you may want to take advantage of them if and when you need to, then ramp up your payments when your finances allow it.

On the flip side, it may be detrimental to your financial goals to choose a plan that’s not aggressive enough. Lower monthly payments may sound lovely today, but it usually means spending more money on interest over time. Look at it this way—would you want an extra $50 per month now if it meant spending an extra $5,000 over the life of your loan? Of course, those numbers will vary based on your loan amount and interest rate, but the basic principle applies in most situations.

4.  Reducing your interest rate where possible
When you took out your student loans, you were probably given an interest rate based on your financial situation back then (in the case of private loans) or based on the rate determined by Congress at the time (in the case of federal loans). However, that doesn’t necessarily mean you’re stuck with those interest rates forever.

If your finances have improved since you signed on the dotted line, you may be eligible to refinance your loans—both private and federal—at a lower interest rate with a private lender like SoFi.

Refinancing can have benefits like reduced monthly payments or a shorter payment term, which can potentially save you on interest over the life of your loan. Or refinancing can also allow you to consolidate multiple loans, simplifying your life with one monthly bill and, hopefully, a lower payment.

Some federal loans offer certain benefits that don’t transfer to private lenders, so it’s important to check if you’re eligible for these benefits before refinancing federal loans with a private lender, as doing so will usually eliminate some or all of those federal benefits.

5.  Revisiting periodically
Ideally your financial situation will improve over time as your career progresses and you build a solid credit history, so you may want to check in on a regular basis to make sure your student loan strategy is still optimized for your current situation.

For example, a raise in pay may enable you to switch to a more aggressive repayment plan, a bonus at work could be put toward your higher interest rate loans, or you may become eligible to refinance as your income and credit score go up. You can even set a reminder to revisit your loans at least once a year, for example at year-end or tax time.

The more vigilant you are about your student loan repayment strategy, the faster you may be able to get them off your plate—and the more money you could save in the long run. Want to learn more about student loan repayment strategies? Read through our student loan help center where you’ll find advice, resources, and more to help you get free of student debt!

This article is intended to provide useful information about personal finance, but it is not intended to provide legal, investment or tax advice.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.