A New Year’s resolution to conquer your student debt

Each year, nearly 5 million college students leave school with student debt. For most of them who graduated this past spring, their six-month “grace period” just ended and those first bills have just have arrived.

For all of you faced with student loan payments and crafting New Year’s resolutions to conquer your debt, we’ve put together some tips to help you navigate through the noise.

Whether you’re just starting out or if you’re worried you’re in too deep, taking action today can help you save money, build your credit, and get you on the road to being debt-free.

For everyone

1. Know what you owe

Before you start, it will be helpful to have a list of your loans and the required monthly payment amounts. It’s very important to know the name of your servicer (the company that sends your student loan bill each month). This might be a different company from the original lender.

Check the national student loan data system
If you aren’t sure what kind of loans you have, visit the National Student Loan Data System (NSLDS) for Students and select “Financial Aid Review” for a list of all federal loans made to you. Click each individual loan to see who the servicer is for that loan (this is the company that collects payments from you).

Request a free credit report
Unlike federal student loans, there is not a single website that contains information about all of your private student loans. If you are unsure whether you have a private student loan, request a free credit report at annualcreditreport.com . Private student lenders may share information about your loans with credit reporting agencies even while you’re still in school or in deferment. You’ll need to contact each of your private student loan servicers to determine your total loan balance.

2. Automate and save

Consider contacting your loan servicer to set up auto-debit. Your servicer will automatically withdraw money from your bank account so you’re less likely to miss a payment. Many lenders offer an interest rate reduction for those who set up auto-debit, which could save you hundreds or thousands of dollars over the life of the loan. If you choose to sign up for auto-debit, make sure you have enough money in your bank account to cover your loan payment; otherwise you might get hit with overdraft fees or other penalties. You can cancel your auto-debit by contacting your servicer.

If you’re worried you’re in too deep

3. Enroll in an income-driven payment plan

There are a number of income-driven payment plans that can lower your monthly payment for your federal student loans.

Pay as you earn
If you graduated this year or later, Pay As You Earn (PAYE) is a newer repayment plan that is likely available for your federal student loans. The plan caps your monthly federal student loan payment at 10 percent of your discretionary income. To determine whether you qualify for PAYE, check out the Pay As You Earn calculator created by the U.S. Department of Education. Learn more at Ask CFPB.

Income-based repayment
If you have older loans, you should look into Income-Based Repayment (IBR). You can get a lower payment with IBR if your federal student loan debt is high relative to your income and family size. While your loan servicer will perform the calculation to determine your eligibility, you can use the U.S. Department of Education’s IBR calculator to estimate whether you would likely benefit from the IBR plan.

Many borrowers with federal Direct Loans can now enroll in IBR and PAYE online . Learn more at Ask CFPB.

4. Request repayment options for your private student loans

Although some companies are willing to help borrowers during a time of financial distress, unfortunately, not all private student loan companies offer assistance when consumers are struggling to repay their loans. We’ve created a sample letter that you can use to ask your lender or servicer to respond with accurate information about alternative repayment plans and loan modification options – potentially giving you valuable information on how to reduce your monthly payment or to temporarily postpone making payments.

We also published a sample financial worksheet for you to assess the amount of money you can put towards your loans. Some student loan companies request recent pay stubs or a bank statement to verify income and expenses, which you should consider attaching to your letter or e-mail.

Other things to think about

5. Sign up for loan forgiveness

We estimate that more than 25 percent of the U.S. labor force works in public service. This includes teachers, librarians, firefighters, military personnel, law enforcement, first responders, nurses, and social workers. There are a number of special loan repayment and forgiveness programs to assist student loan borrowers working in public service. Check our guides for servicemembers , teachers , and other public servants .

6. Protect yourself from co-signer surprises

We published a report this year that describes complaints we received from borrowers who were placed in default, even though their loans were in good standing which can happen if a co-signer (typically a parent or a grandparent) died or filed for bankruptcy.

Many lenders advertise that a co-signer may be released from a private student loan after a certain number of consecutive, timely payments and a credit check to determine if you are eligible to repay the loan on your own. If your lender offers co-signer release, you may want to ask about this benefit and remove your co-signer as soon as you are eligible. To help you get started, we’ve put together a sample letter that you can send to your student loan servicer.

7. Try to refi

If you have graduated, obtained a job, and have excellent credit, you may be able to qualify to refinance your existing private student loans with a new private loan at a lower rate. Unfortunately for many in this situation, there are only a small handful of financial institutions that offer this financial product. Learn more at Ask CFPB.

8. Avoid unnecessary interest if you’re paying extra

Since many borrowers can’t refinance, one of the only ways to avoid paying unnecessary interest is to pay your high-rate loans off more quickly. You can send this sample letter to your servicer to ask them to direct any extra payments toward your highest-rate loan, which may save you hundreds of dollars or more in extra interest payments.

9. Submit a complaint if you’re having trouble

If you’re facing inconsistent information, poor customer service, or any other issue with your student loan servicer or a debt collector, you can submit a complaint to us. We’ll forward your complaint to the company and work to get a response from them. Visit consumerfinance.gov/complaint or call us at (855) 411-2372.

If you’re just getting started and want to learn more about your repayment options, you can also try out our Repay Student Debt web tool.

Remember, missing payments on your federal or private student loans can hurt your credit rating and your financial future. Missing a single payment on a student loan can result in late fees, additional interest charges, and can increase the cost of repayment. Taking action today could save you hundreds or thousands of dollars over the life of your loan.

Make this new year one where you take control of your student loans and get on the path to be debt-free.

Rohit Chopra is the CFPB’s Student Loan Ombudsman. To learn more about our work for students and young Americans, visit consumerfinance.gov/students.