Student Loans 101: The Critical Information You Need to Know About Your Student Loans

Preparing for July 1: A Borrower’s Step‑by‑Step Series

With major federal student loan changes arriving on July 1, we’re spending the next few months breaking everything down for you on our blog. No jargon, no confusion—just clear explanations of what’s changing and why it matters.

We’re truly beginning with the basics, understanding how much student loan debt you owe, what type of loans you have, and your current repayment plan. These are the most crucial things to know before the new rules take effect.

Step One: Identify Your Starting Place

To complete this step you’ll need to distinguish between the two overarching types of student loans, federal and private student loans. The majority of student loan debt is federal, so if you aren’t sure, the best place to start is the studentaid.gov website.

Federal Loans - Login at studentaid.gov.
If you have federal student loans, you should already have an account. If you’ve forgotten the details you’ll be prompted to enter personal information to retrieve your login.

Once on the site, you’ll be able to navigate to the ‘My Loans’ section to see details about your loan balances & interest rate, the type of loans you have, and their repayment plan(s) which you’ll need to make important decisions.

Keep in mind, you can have more than one federal student loan servicer, but studentaid.gov should reflect all of your federal student loans across different federal servicers.

Private Loans
If you have private student loans, you’ll need to log in directly to your lender’s website to view your loan details. If you’re unsure whether any of your loans are private, checking your credit report can help you confirm.

This series focuses on federal student loans, so the guidance and options discussed below apply specifically to federal loans.

Step Two: Understand Your Repayment Plan Options

First, it helps to understand the two main categories of repayment plans: those that pay off your loan over a set period of time (term‑based plans) and those that base your monthly payment on your income (income‑driven plans), which may not fully pay down your balance over time.

Term-Based Repayment Plans

• Standard Repayment Plan: Fixed monthly payments over a 10-30 year repayment term depending on the loan balance.

• Extended Repayment Plan: Fixed monthly payments over an up 25 year repayment term depending on the loan balance.

• Graduated Repayment Plan: Comes in both 10 year and extended repayment terms. Payments start low, often only covering interest, then increase every two years to repay the balance over the term.

Income-Driven Repayment Plans

• Pay As You Earn (PAYE): 10% of discretionary income, no more than the 10 year standard payment

• Income-Based Repayment (IBR): 10-15% of discretionary income, no more than the 10 year standard payment

• Income-Contingent Repayment (ICR): 20% of discretionary income but no more than a payment under a 12 year repayment term adjusted for income

• Saving on Valuable Education (SAVE): currently blocked and being eliminated. Borrowers already enrolled in this plan are in an interest earning forbearance and are not making progress toward forgiveness.

Step Three: Identify Your Goals

You want your student loan repayment strategy to align with your broader financial goals, so it helps to be clear about what those goals are. Below are some of the most common student loan repayment goals to consider.

Achieve Student Loan Forgiveness

There are a few categories of student loan forgiveness, all of these are for federal student loans, not private. We’ll do a deeper dive on these in a future blog post. Both PSLF & IDLF require borrowers to make payments under one of the income-driven repayment plans. So if your goal is to pursue forgiveness under those programs, you MUST make payments under one of the income-driven repayment plans.

Here are the forgiveness options:

1. Public Service Loan Forgiveness (PSLF): Forgives the entire remaining balance (tax free) of Federal Direct Loans after 120 months of working 30+ hours per week at a qualifying non-profit organization while making income-driven payments.
2. Teacher Loan Forgiveness: Forgives either $17,500 or $5,000 of federal student loans for five consecutive years of teaching in a qualifying low income school district.
3. Income Driven Loan Forgiveness (IDLF): Forgives the entire remaining balance of federal student loans after 20-25 years of income-driven payments. Forgiven amount is taxable.
4. Perkins Loan Cancellation: Cancels some or all of a borrower’s Perkins loans after a period of time working in specific roles.

Have the Lowest Monthly Payment

The most affordable repayment options are usually the Extended Repayment Plan or one of the income‑driven repayment plans (IBR, PAYE, or ICR). The Graduated Repayment Plan can look appealing at first, but payments increase every two years and can end up tripling over time. Many borrowers eventually have to switch out of graduated plans because the rising payments become unaffordable.

Keep in mind that payments under income-driven plans don’t have to pay down the balance of the loan. If your income is low enough relative to your debt, your balance may grow. In this situation, it’s critical that you achieve loan forgiveness (either PSLF or IDLF depending on your employment type) to get rid of your student loan balance.

Be wary of forbearance, interest still accumulates and it’s not a long term solution. Eventually, you will have to make payments and will need to identify an affordable repayment plan to keep your loans in good standing.

Pay Your Loans off as Fast as Possible

For borrowers with higher incomes who don’t qualify for PSLF (or choose not to pursue it), your monthly payment amount directly affects how quickly you’ll repay your debt. Larger payments shorten your repayment timeline—but it’s essential to choose an amount you can comfortably afford.

You can increase your payment in two ways:

• Switch to a plan with a higher required monthly payment, or
• Stay in your current plan and make extra payments each month for added flexibility.

One important note: servicers typically apply extra payments by moving your due date forward. If you prefer your due date to stay the same, update your settings in your servicer’s portal (look under repayment options for the setting that prevents due‑date changes) or contact your servicer directly.

Be wary of refinancing federal student loans. This privatizes federal loans and makes them forever ineligible for federal student loan benefits like loan forgiveness and flexible repayment options. Interest rates in the market are often not significantly better than federal interest rates so consider your choice carefully.

Step Four: Make a Change to Meet Your Goals

Before you make a change, estimate your monthly payments using the Federal Student Aid Loan Repayment Simulator https://studentaid.gov/loan-simulator. You’ll be able to see your estimated monthly payments under the different repayment plans.

Be sure to choose a plan that you can afford and meets your goals for loan forgiveness (or not).

Once you’ve identified the repayment plan that works best for you, you can change repayment plans anytime for free— by applying for an income‑driven plan at https://studentaid.gov/idr/ or just contacting your servicer for all other plans.

What about the repayment plan changes coming in July?

Now that you have an understanding of where you are today, your goals, and the changes you need to make to meet those goals. You can take action on those today.

Our next post will talk about the impact of the key changes coming for borrowers in July, how those might impact you, and key deadlines you may need to meet.

If you have Tuition.io: our student loan coaches are available to help you choose the best repayment plan and navigate the process. Log in to Tuition.io to schedule a 1:1 with a coach.

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