6 ways to pay off your student loans

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(MoneyWatch) Roughly two-thirds of students who graduated with a bachelor's degree this year must now start paying off their student loans.

Six months after graduating, students are expected to start paying off their student loans.

Here are six steps that college grads can take to whittle down their college debt balances:

1. Know what loans you have.

This might seem silly, but there are plenty of borrowers who confuse their federal student loans with private student loans. It's important to know the difference because borrowers have more options for repaying their federal student loans.

2. Use the federal loan repayment estimator.

Before you begin repaying your college debt, you should explore your repayment options by using the federal loan repayment estimator.

You'll pay less interest if you choose the standard repayment plan which has a 10-year term. There is also a graduated repayment plan that offers lower payments initially that eventually increase during a 10-year period. This could be a good option for grads who know their income will be rising.

You can also stretch payments over a 25-year period through the extended repayment plan.  This will be an expensive option.

3. Explore a new federal repayment plan.

If you graduated without a job or are underemployed, you should explore the new federal program called Pay As You Earn, which allows eligible borrowers to lower their payments based on their income.

4. Visit the National Student Loan Data System.

If you haven't kept track of your federal student loans, the federal government has. You can find information on all your federal students loans, as well as the loan servicer for these loans, by using the National Student Loan Data System.

5. Repay your student loans automatically.

The worst thing that could happen to a new college grad is to miss making payments. It's easy to do if the lender starts sending your statements to an old college address or parents' home.

You will avoid this from happening if you sign up for automatic payments. Fastweb has estimated that 22 percent to 25 percent of borrowers are late or tardy with their first payment.

6. Pay off the highest interest rate first. 

You will not get penalized for paying down any student loans quickly. Paying off the loan with the stiffest interest rate will save you money in the long term.

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