Develop an Action Plan for Your Student Loans

Don't let student loan payments overwhelm you

College graduate with diploma who now must pay student loans

Thomas Barwick / Getty Images

Does it ever feel like having to repay your student loans is so far off that it's hard to even think about it? There are so many fun things to do and life plans to make that many college graduates put off thinking about the looming decade (at a minimum) of making student loan payments.

It's best to approach your student loans proactively and create a way to ensure you can pay off your loan or find some assistance. Here are a few recommendations that can help you deal with federal student loan debt. However, you might be able to apply them to private student loans as well.

Know Your Payment Amount

You can’t possibly develop a realistic budget until you know the amount of money you will be expected to pay monthly. Once you have this information in place, you can compare it against your anticipated income and expenses to determine if you might run into a shortfall.

Federal Student Aid (FSA) has a payment calculator you can use to calculate payment amounts under different plan options. If you have private student loans, many of them also offer similar estimators, so you should be able to calculate the total payments you will be making.

Study the Payment Plans

With federal student loans, you can choose your payment plan options, but you have to let your loan servicer know that you will be participating in one of these plans. Otherwise, you will be automatically enrolled in the standard 10-year repayment plan, where the monthly payments might be a little higher than you can afford.


You should be aware that some payment plan options might end up costing you more in total over the long run because of interest. The longer you make payments, the more interest you end up paying.

Other student loan repayment plans can extend the payment period, gradually step up the amount due, or develop a schedule based on your earning capability. If you choose one of the income-based repayment plans, you will have to keep in touch with your loan servicer regarding your income. You can also choose to have your loan servicer determine which income-based plan is best for you.

Are You Interested in Public Service? ​

If you plan on going into public service, you should know that the Public Service Loan Forgiveness (PSLF) Program will forgive the remaining balance on your Direct Loans (or loans converted to Direct Loans) after you have made 120 monthly payments while working full-time for a qualifying employer.

To help determine if you are meeting the requirements to qualify for this program, you should periodically submit an Employment Certification for Public Service Loan Forgiveness form. After you make 120 qualifying monthly payments, you will need to submit a PSLF application.

If you've been employed in the public sector and have been making payments on your student loan but didn't qualify for forgiveness, you might qualify for a limited waiver. The limited waiver is valid through Oct. 31, 2022, for any public sector worker that has consolidated the eligible loans into the Direct Loan Program by that date. The loan type and repayment plan criteria are also waived for this period, as long as you've had qualifying employment in public service and have made 120 total payments.


Forgiven or discharged student loan debt is generally treated as income in the year it is written off. However, if you have a federal student loan that is forgiven or discharged between 2021 and 2025, the American Rescue Plan of 2021 waived the tax reporting requirement for this period.

Consider Loan Consolidation

You may have taken out multiple student loans from multiple servicers to fund your education. If so, you might find it difficult to keep track of all the paperwork and payments. It might make sense to consolidate your federal student loans into a single monthly payment.

To apply for a Direct Consolidation, you can use the electronic or paper option. The total application process takes about 10 minutes. You may also want to consider consolidating your private student loans into one loan as well.

Can You Make Payments Automatically?

If you have a bank account that you can set up to make automatic payments, you could be eligible to receive a 0.25% interest rate deduction on your federal student loans when you enroll. Ask your loan servicer if this option is available.

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Student Aid. "The Standard Repayment Plan Is the Basic Repayment Plan for Loans from the William D. Ford Federal Direct Loan (Direct Loan) Program and Federal Family Education Loan (FFEL) Program."

  2. Federal Student Aid. "Choose the Federal Student Loan Repayment Plan That’s Best for You."

  3. Federal Student Aid. "Public Service Loan Forgiveness Form," Page 4.

  4. Federal Student Aid. "Public Service Loan Forgiveness Limited Waiver Opportunity."

  5. Internal Revenue Service. "Topic No. 431 Canceled Debt – Is It Taxable or Not?"

  6. "The American Rescue Plan Act of 2021," Pages 182-183.

  7. Federal Student Aid. "Consolidating Your Federal Education Loans Can Simplify Your Payments, but It Also Can Result in the Loss of Some Benefits."

  8. Federal Student Aid. "Loan Repayment Checklist."

Related Articles