Entering Student Loan Repayment

What Actually Happens?

If you have a client who is currently in school or deferring loans, it is often difficult to determine what repayment will look like for them. Lots of questions come up…

  • What will their monthly payment be?
  • What kinds of options will be available to them?

From The Top

Let’s take a quick look at the process of entering repayment.

Once a student takes out a loan for their education, interest begins accruing immediately (unless the loan is subsidized*). Luckily, the interest is not added to the balance — it just gets tallied every month the loans are “in deferment”.

There are several types of deferment. The most common are In School or In Grace Period. The grace period is a six month period post-graduation or withdrawal where the borrower is not obligated to make payments.

There are two important things that happen by default when loans are transitioned from “Deferred” to “In Repayment”:

  • Interest capitalizes: Any outstanding interest is applied to the balance
  • Monthly payment is set: The loans enter a 10-Year Standard Repayment Plan, where the monthly payment is determined by the new balance.

These are the default actions. It’s up to the borrower to tell their servicer which repayment plan they’d like to be on — that’s where Payitoff can be helpful.

Simulating Repayment

Once you sync your client’s loans or upload the MyStudentData file, our system will detect whether the loans are currently in deferment.

You’ll see an opportunity in the Client Overview

From there, we’ll tell you which loans are going to enter repayment

Once you click “Enter Repayment”, each loan listed will be put on the Standard Repayment plan with an updated payment:

Example loan name, interest rate, new balance and new monthly payment

This simulates the process as if the client were to enter repayment today!

From here, you can compare any of the federal programs available against the default repayment schedule, including income-driven options.

More Simulations

We plan to build more simulations for other common situations:

We‘re also going to introduce “Undo” functionality in case you want to revert to the prior scenario.

If you have questions, feel free to shoot us an email!


*Subsidized loans are available to students with financial need. Interest will not accrue during deferment periods. Learn more about subsidized loans here.

Leave a Reply