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5 Smart Steps to Managing Your Federal Student Loans

Latife H Neu


  • If you don’t know what kind of loans you have, you can view a full list of your federal student loans by logging on to your account at
  • In 2023, the Biden administration launched SAVE, which stands for the Saving on a Valuable Education Program, which lowers payments in two ways.
  • Proceed with caution before refinancing; know exactly what you’re giving up and what you’re getting before you enter into a student loan refinancing agreement.
5 Smart Steps to Managing Your Federal Student Loans
Aida Koric via iStock

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Within the next few months or years, you’ll come out of law school armed with new skills and ready to embark on your legal career.

There’s a good chance you’ll also carry with you some federal student loan debt, which makes up 80 percent of student debt. The good news is that you can take steps to manage that debt smartly in ways that work to your financial and mental advantage. 

1. Know Your Loans

Your strategy depends on the type of loans you have:

  • federal student loans,
  • private student loans, or
  • federal and private loans.

If you have an educational loan that doesn’t appear on your account, then it falls into the category of a private student loan. Federal loans are loans made or guaranteed by the federal government.

Since 2010, most federal loans have been made through the Direct Loan Program, meaning the US Department of Education is your creditor; your servicer is the company that sends you bills and accepts your payments.

Interest rates, repayment options, and forgiveness programs are based on defined federal policies and programs. If you don’t know what kind of loans you have, don’t worry. You can view a full list of your federal student loans by logging on to your account at, maintained by the DoE.

Unlike federal loans, the terms of private loans are defined by the contract you signed. Few options exist to arrange lower payments or for discharge or forgiveness. While these terms vary widely, your private student loan may feature a high interest rate or a cosigner, usually one of your family members or a close friend.

2. Lower Your Payments

Following the six-month grace period after you leave school, federal loan payments will begin to come due. If you have a large balance, which is very common among law school graduates, you may open your first bill to find that an unmanageable payment is coming due in the near future.

Income-Driven Repayment Plans

Rather than immediately seeking forbearance or, worse, ignoring your bill entirely, take steps to neutralize the high payment by entering an income-driven repayment plan (IDR). IDR programs offer access to payments capped at a certain percentage of your disposable income with the promise of discharge of the balance after either 20 or 25 years of participation in the program.

Unfortunately, in the past, IDR programs were confusing and poorly implemented. As a result, relatively few people were granted discharge of debt. Instead, they struggled with high payments, relied on repeated forbearance, or defaulted on their loans.

Saving on a Valuable Education Program

In late 2023, the Biden administration launched a new IDR program dubbed SAVE, which stands for the Saving on a Valuable Education Program. It will result in the lowest payment options yet. SAVE is available for all Direct Loans except Parent Plus Loans, which have distinct rules and options.

The SAVE calculation lowers payments in two ways. First, it relies on a formula that considers more household income nondiscretionary, leaving less money on the table for the IDR payment. Second, beginning in mid-2024, SAVE will, for most borrowers, demand a smaller portion of disposable income to be committed to student loan payments.

Specifically, repayments directed to undergraduate debt will require 5 percent of discretionary income, with a 10 percent commitment required for graduate loan payments. A weighted average between 5 and 10 percent will apply to undergraduate and graduate debt borrowers.

To access the SAVE Program after you graduate, log in to, click on “Loan Repayment,” and select “Income-Driven Repayment (IDR) Plans.” The online IDR application will take about 10 minutes and ask for household size and income information. The IDR calculation can be based on adjusted gross income shown on your most recently filed tax return or through proof of current income—generally two months of your pay summaries.

Married borrowers who file their income taxes under the married, filing separately status, or who “cannot reasonably access” their spouse’s income information are eligible to have their IDR payment calculated based on their income alone. This is a potentially significant savings if your nonborrower spouse has significant income.

Once enrolled in an IDR plan, you must submit a new IDR application and proof of income annually. While it’s entirely appropriate to recertify early if your income drops, you have no duty to report an increase in your income before your recertification date.

3. Consider Whether to Consolidate

During law school, and perhaps undergraduate as well, you likely were disbursed new loans each quarter or semester, each with its own interest rate and payment. According to the loan agreement, these unconsolidated loans each have a repayment period of 10 years.

Consolidation is a process that pulls several different loans—potentially including undergraduate loans, loans through other federal programs, and even defaulted loans—into a new loan vehicle under the Direct Loan Program.

If you have older loans made under the FFEL Program (pre-2010), you should consolidate as soon as possible to get in line for the more favorable programs available for Direct Loan borrowers. The only borrowers who need to be cautious about consolidation are those who owe on both their own loans and Parent Plus Loans, taken to pay for their children’s education. Mixing Parent Plus Loans into the new loan can have unintended consequences by closing off access to the best payment plans.

4. Know the Pros and Cons of Refinancing

Student loan refinancing is the process of opening a new loan with a private bank or other financial institution, which pays off your original student loans. The student loan refinancing industry is booming, and you may be inundated with refinancing opportunities. Is this a good idea?

Rather than setting out a bright-line rule about refinancing, I advise new attorneys to proceed with caution. Know exactly what you’re giving up and what you’re getting before you enter into a student loan refinancing agreement. When the refinanced loan is private student loan debt, it’s a fairly easy analysis: Does it offer significantly lower interest, significantly lower monthly payments, or the removal of a co-signer? If so, the refinance may be a good move.

On the other hand, lowering your contractual interest rate is only one element to consider before refinancing federal student debt with a private lending institution. In a private refinance arrangement, you’ll lose access to income-driven repayment options, forgiveness and discharge programs, and any future relief measures.

Additionally, while federal student loans are discharged if the borrower dies or becomes permanently disabled, very few private refinance loans offer these protections. When considering a debt that you may be paying for decades, you can’t ignore the possibility of death or disability. Historically, the protections that accompany federal loans have often outweighed the benefit of a lower interest rate.

5. Seek Help If You Need It

It’s fair to say that many borrowers find themselves confused and anxious when facing their student loan debt. However, as a law student or new attorney, you have all the skills you need to make sense of your student loan options.

Start at to review the current Department of Education policy. For another trusted and comprehensive reference, check out Student Loan Borrower Assistance, maintained by the National Consumer Law Center. If you encounter a problem with your loans and reach a solution with your servicer, contact the Department of Education Ombudsman’s Office.

Finally, beware of scams. Student loan scammers are sophisticated and persistent. They often pretend to be affiliated with the DoE and may know the details of your student debt. Be suspicious if you’re asked to pay an upfront fee to get help, a monthly fee, or to hand over your credit card information. If you’re pressured to act fast to qualify for “presidential loan forgiveness” or some sort of special deal, hang up and do your own research at one of the legitimate websites. Any legitimate program will still be available after you do your due diligence.

Listen to Latife Neu discuss the current state of student loans on the Litigation Radio podcast