Graduating is a huge achievement. For many new graduates, it also means it's time to start repaying student loans. The federal repayment system has changed significantly, with new plans for loans made from July 2026 onward. Understanding your options before your first bill arrives can save you money and prevent costly mistakes. This guide covers the essentials for federal student loans.
Step 1: Find out exactly what you owe
Log in to your account at StudentAid.gov. There you'll see every federal loan you've borrowed, the current balance, interest rates, and the name of your loan servicer — the company that manages your billing and repayment. Create an online account with your servicer and make sure it has your current email, phone number and address. If you have private student loans, check your credit report or old lender paperwork to find those as well.
Step 2: Use your grace period wisely
Most federal Direct Loans come with a six-month grace period after you graduate, leave school or drop below half-time enrollment. Payments aren't due during this time, but interest on unsubsidized loans continues to grow. Use these months to:
- Choose a repayment plan.
- Build a post-graduation budget that includes your loan payment.
- Complete Exit Counseling on StudentAid.gov (required for Direct Loan borrowers).
- Pay accrued interest if you can, so it isn't added to your balance.
Step 3: Understand your repayment plan options
Which plans you can use depends on when your loans were made.
If you borrow new loans on or after July 1, 2026
New borrowers generally have two choices:
- Tiered Standard Plan: fixed monthly payments over a period based on how much you owe — larger balances get longer repayment terms.
- Repayment Assistance Plan (RAP): an income-driven plan where your payment is a percentage of your adjusted gross income, with a small minimum monthly payment and a reduction for dependents. Any remaining balance may be forgiven after 30 years of qualifying payments.
If you don't choose, you may be placed on the Tiered Standard Plan automatically.
If all your loans were made before July 1, 2026
You can generally keep using existing plans such as the Standard, Graduated and Extended plans, and certain income-driven plans. Some older plans are being phased out over the next few years, and the SAVE plan has ended. Check StudentAid.gov and your servicer's messages for your specific options and deadlines.
Step 4: Choose the right plan for you
- If you can afford the payments, a standard fixed plan usually means paying off the loan faster and paying less interest overall.
- If your income is low or uncertain, an income-driven plan can keep payments manageable and help you avoid default.
- If you work in public service, look into Public Service Loan Forgiveness (PSLF). Borrowers who work full-time for a qualifying government or nonprofit employer and make 120 qualifying monthly payments under a qualifying plan may have their remaining balance forgiven.
Use the official Loan Simulator on StudentAid.gov to compare monthly payments and total costs under each plan.
Step 5: Set up automatic payments
Enrolling in autopay with your servicer means you'll never miss a payment, and federal servicers typically offer a small interest-rate reduction for doing so. Make sure your bank account always has enough to cover the payment.
Smart strategies to pay less
- Pay extra when you can and ask your servicer to apply it to the loan with the highest interest rate.
- Pay interest during the grace period to prevent it from being added to your principal.
- Check employer benefits. Some employers offer student loan repayment assistance.
- Look into state programs that offer loan repayment help for teachers, nurses, healthcare workers and other professions in high-need areas.
If you're struggling to pay
Don't ignore your loans. Contact your servicer right away. Options may include switching to an income-driven plan, deferment (for situations like unemployment or returning to school) or forbearance (a temporary pause, though interest usually continues). Missing payments can lead to delinquency and eventually default, which can damage your credit, lead to wage garnishment and seizure of tax refunds, and make you ineligible for more federal aid.
Consolidation and refinancing
Federal Direct Consolidation combines multiple federal loans into one, which can simplify payments, but it may affect your repayment plan options and progress toward forgiveness — read the details first. Private refinancing may lower your interest rate if you have strong credit and income, but you permanently lose federal protections like income-driven repayment and PSLF. Think carefully before refinancing federal loans.
Your repayment checklist
- Log in to StudentAid.gov and identify your servicer.
- Complete Exit Counseling.
- Compare plans with the Loan Simulator.
- Choose a plan before your grace period ends.
- Set up autopay.
- Contact your servicer immediately if you have trouble paying.
Still in school? Read our guide to federal student loans to borrow wisely from the start.
