Student Loans and Credit for Students — Before the First Bill

Your reality

The parts of this topic that hit your line of work differently — and that generic advice skips.

• Federal and private loans are different animals

  Federal loans carry income-driven repayment, deferment and forgiveness options. Private loans generally carry none of that. Knowing which of yours are which is the first thing to establish, and plenty of borrowers have never checked.

• The grace period ends whether you're ready or not

  After you leave school there's a window before repayment starts. It's the best time to sort out your servicer, your plan and your budget — and it passes quietly while people assume someone will remind them.

• No credit history is treated a lot like bad credit

  A thin file makes renting, insuring a car and getting a phone plan harder and more expensive. Building it early is cheap; needing it before it exists is not.

Frequently asked questions

• Should I refinance my student loans for a lower rate?+

  Be very careful. Refinancing federal loans with a private lender permanently removes income-driven repayment, deferment options and Public Service Loan Forgiveness — and it can't be undone. If there's any chance you'll work for a government or nonprofit employer, that trade can be extremely expensive.

• How do I build credit if nobody will approve me?+

  A secured card, where you put down a deposit that becomes your limit, is designed for exactly this. Being added as an authorized user on a family member's long-standing account can also help. Use it lightly, pay in full, and let time do the rest.

• Should I pay off loans or start saving first?+

  Get a small emergency cushion in place first — without one, the next surprise goes on a credit card at a much worse rate. After that, capture any employer retirement match, then attack the highest-interest debt.