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By Rohit Chopra
October 30, 2015

Next month, about 1 million college borrowers will have to make their first student loan payments.

Unfortunately, as research by the Consumer Financial Protection Bureau has found, too many borrowers aren’t getting good customer service or clear information from their student loan servicer on the best ways to manage that debt.

While our student loan system can be convoluted and confusing, navigating repayment is easier than you might think. And if you’re one of the million new grads entering repayment this month, here are five steps to get started:

  1. Know what you owe. You can find all of your federal loans by logging into the National Student Loan Data System. If you also have private loans, download a free credit report at annualcreditreport.com for a full picture of all of your debt. Once you have information on all of your loans, set up an online account for each of them. Almost all student loan servicers have online systems where you can check your balance and make electronic payments. Make sure to keep your contact information up to date so you don’t miss any important notices.
  1. Reduce your minimum monthly payments. If student loan payments will be eating up too much of your income, sign up for an income-driven repayment plan like Pay As You Earn (or PAYE), which caps your minimum payment at just 10% of your discretionary income. (Last week, the Department of Education announced that starting Dec. 16, some 5 million additional borrowers will become eligible for a similar repayment plan called Revised Pay As You Earn, or REPAYE.) If you’re in one of these plans and work as a teacher or in another public service job, after you’ve made 10 years’ worth of on-time payments, any remaining debt will be forgiven. Everybody else can get their remaining debts forgiven after 20 to 25 years of payments, depending on their plan and whether they had any debts for graduate school. Private lenders, such as Sallie Mae and the big banks, generally don’t offer as much repayment flexibility. If you can’t afford your private loan payments, log into your account with the lender and send an electronic message asking for help. The CFPB has published a sample letter you can use.
  1. Do the long-term math. Reducing monthly payments now can be a critical way to stay afloat and avoid stains on your credit report, but remember: You will have to pay these loans back eventually. The less you pay now, the more you’ll have to pay later. But don’t pay off your loans so quickly that you miss out on saving for retirement. If your employer offers a retirement plan match, be sure to contribute enough so you get the full match. You don’t want to pass up that free money. Then, pay off your debts with the highest interest rates as quickly as possible. That means directing as much as you can toward high-interest debt such as credit cards or private student loans. Once those are clear, put any extra money toward your federal student loans. There is no prepayment penalty for student loans, but some servicers haven’t made it easy for people who want to accelerate repayment. So instruct your servicer to apply your payments to loans with the highest interest rate by using this sample letter from the CFPB.
  1. Put your loans on auto-pilot. Most student loan servicers encourage you to pay automatically through your bank account. You’ll generally need to log into your account and sign up for “auto-debit” or “EFT” through each of your servicers. This will ensure you pay on time, avoiding late fees. And there’s a bonus: Lenders usually reward you with a small reduction in your interest rate. The federal government, for example, will reduce your rate by ¼ of a percent. For the typical borrower, this will cut your bill by a few bucks each month and save you hundreds of dollars over the life of the loan. But watch your bank balance. If you don’t have enough money in your account when the monthly withdrawal is made automatically, your bank can charge you an expensive overdraft fee. Just one of those a year will eat up all of that year’s interest rate savings.
  1. Try to refi your loans, but watch out. Private student lenders like Sallie Mae and many of the big banks typically won’t tell you that you can try to refinance your private student loans, since they earn more if you’re locked into a high interest rate. But refinancing can often lead to big savings. Borrowers who have steady jobs and good credit scores have a shot at getting low-rate refinance deals from lenders listed on sites such as Credible.com. But be careful about refinancing federal student loans. While escaping a high rate can be tempting, you’ll be signing away many benefits, including access to income-driven repayment plans and possible forgiveness.

Read next: Why Now Might Be the Best Time to Refinance Your Student Loans

Rohit Chopra, a senior fellow at the Center for American Progress, served as the first student loan ombudsman at the Consumer Financial Protection Bureau, from 2011 to 2015.

For more advice about choosing a college, paying for college, and how to succeed after college, visit the new MONEY College Planner, with our exclusive “Find Your Fit” tool.

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