You've survived college, but now you face a new challenge: paying off the huge student loans that you had to take on in order to finance your education. It's not uncommon for former students to still be paying off their student loans decades after graduation. Given this long time frame, any mistakes you make during repayment will likely have enormous repercussions, so it's important to be familiar with the most common errors so that you can avoid them.

Choosing the wrong repayment plan

If you have private student loans, you may not have a lot of repayment options, but federal student loan borrowers definitely do. By default, the Department of Education will stick you in the standard repayment plan. However, the standard plan is probably not the best option for you, especially right after graduation.

A new graduate just starting a career probably makes a relatively low income, so one of the income-based plans is likely to be the best fit. These plans adjust your payments to fit your income, and as a bonus, any outstanding balance after 20 to 25 years of payments will be automatically forgiven. You can look over the repayment options and change your plan on the My Federal Student Aid website.

Dollar sign on graduation cap tassel

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Overusing loan forbearance

Most student loans have payment forbearance options, allowing you to temporarily suspend your payments when times get tough. However, what you may not realize is that, while you don't need to make payments during the forbearance period, interest keeps right on accruing. (This is not the case with loan deferments, but those programs are much more difficult to qualify for.)

The occasional use of payment forbearance when you really are having trouble making your budget work is fine. But using these programs frequently means that your student loan balances will grow instead of shrink over time. You don't really want to be still paying your student loans when you're receiving Social Security benefits, do you?

Not checking out refinance/consolidation options

Student loan refinance and consolidation programs aren't always the best option, but it's definitely a good idea to check them out once every couple of years or so. A loan refinance typically makes sense if interest rates have dropped substantially since you took out the loan. Depending on what type of loans you have, a refinance may be rather expensive, so be sure to do the math and confirm that the money you'll save on interest will be more than enough to make up for fees and other charges.

Consolidation allows you to combine several student loans into a single large loan. The Department of Education will consolidate your federal loans at no charge -- however, you can't consolidate federal loans with private loans. If you have several small private loans that you want to consolidate together, you may or may not be able to do so. Check with your lender to see if this is an option.

Loan consolidation can turn several monthly payments into one payment, which can simplify your life. It also resets the payment period on the loan back to 30 years, so you get more time to pay off the loans.

This may be either a good thing or bad thing depending on your circumstances. On the one hand, it allows you to lower your monthly payment because your payment period has extended; on the other hand, you'll end up paying more in interest over the life of the loan.

Not having a plan

It's important to know where your student loans fit into your overall financial plan. Will you adopt the strategy of paying off the loans as quickly as possible, or of stretching out repayment as long as you can? Either of these may be the best solution for you, depending on your overall circumstances and financial goals. The worst financial plan is the one you never bother to make.

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