If you graduated from your degree program this past spring, many of your student loans might be reaching the end of their grace period. This means that within the next month, you might be getting your first bill for your student loans.
What is a Grace Period?
So, what is a grace period? A grace period is a finite period of time right after graduation, during which no payments are due on your student loans. The idea behind a grace period is that people should be given sufficient time to find a job, transition out of college housing and get situated before their first payment becomes due.
Your loan is in good standing but you're not billed for most student loans. The grace period for most student loans lasts six months, although some loans, such as federal Perkins loans, have longer grace periods. Other student loans do not have grace periods at all, and your bills might be issued shortly after you graduate.
Grace periods are critical during transitional periods so that you don't necessarily have to worry about paying your student loans - especially if you're still looking for a job, trying to find housing and getting your life in order after completing your degree program. On the other hand, interest still accrues on your loans, and you will eventually get billed. If you're not ready for that, it can be problematic.
Many people don’t realize that grace periods can only be used once. That means that once you use up the grace period on a particular student loan, it cannot be used a second time. This gets some graduate students into trouble, because they may not realize that while their graduate school loans have a grace period, their undergraduate loans do not.
How to Prepare for the End of Your Grace Period
If you’ve recently graduated from a degree program and aren’t sure how your grace periods line up, it’s important to get that information so that you can be prepared for repayment. First, reach out to your loan servicers. Find out when your grace periods end, and when your first due date is once you enter repayment. That way, you’re ready and prepared when that first billing statement arrives at your doorstep. Then, use that last month or two of your grace period to figure out what repayment plan option is going to be best for you.
There is a menu of many different types of repayment plan options. You might be able to extend the repayment term and lower the payments if you're still having trouble securing employment. You could also explore an income driven repayment plan, where you can make payments based on your income for a period of time. If your income is low enough, you might start off with a very low payment, or even no payment at all. You can also explore options like deferment and forbearance to further postpone payments if you're experiencing an ongoing hardship, but generally income driven repayment is a better option in those situations.
Borrowers can also use this time to think about loan consolidation. The federal government offers a student loan consolidation program, which in some cases can be beneficial. It can open up new repayment plan options or simplify repayment if you have multiple federal loans with multiple loan servicers. But there are also sometimes downsides to consolidating, including erasing any prior repayment progress you may have made on the underlying loans.
Use your grace period strategically to figure out your best repayment approach for your student loans. Before you do anything, and before you get that first bill, do an inventory and figure out what student loans you have, and what your repayment options are. It’s important to develop a game plan so that you're not scrambling when your grace period ends.
Recertify your loans before your grace period expires by calling us at 1-833-516-2867 today!
Source: https://www.forbes.com/sites/adamminsky/2018/12/21/student-loan-grace-periods-are-ending-soon/#6238ecdf5608
What is a Grace Period?
So, what is a grace period? A grace period is a finite period of time right after graduation, during which no payments are due on your student loans. The idea behind a grace period is that people should be given sufficient time to find a job, transition out of college housing and get situated before their first payment becomes due.
Your loan is in good standing but you're not billed for most student loans. The grace period for most student loans lasts six months, although some loans, such as federal Perkins loans, have longer grace periods. Other student loans do not have grace periods at all, and your bills might be issued shortly after you graduate.
Grace periods are critical during transitional periods so that you don't necessarily have to worry about paying your student loans - especially if you're still looking for a job, trying to find housing and getting your life in order after completing your degree program. On the other hand, interest still accrues on your loans, and you will eventually get billed. If you're not ready for that, it can be problematic.
Many people don’t realize that grace periods can only be used once. That means that once you use up the grace period on a particular student loan, it cannot be used a second time. This gets some graduate students into trouble, because they may not realize that while their graduate school loans have a grace period, their undergraduate loans do not.
How to Prepare for the End of Your Grace Period
If you’ve recently graduated from a degree program and aren’t sure how your grace periods line up, it’s important to get that information so that you can be prepared for repayment. First, reach out to your loan servicers. Find out when your grace periods end, and when your first due date is once you enter repayment. That way, you’re ready and prepared when that first billing statement arrives at your doorstep. Then, use that last month or two of your grace period to figure out what repayment plan option is going to be best for you.
There is a menu of many different types of repayment plan options. You might be able to extend the repayment term and lower the payments if you're still having trouble securing employment. You could also explore an income driven repayment plan, where you can make payments based on your income for a period of time. If your income is low enough, you might start off with a very low payment, or even no payment at all. You can also explore options like deferment and forbearance to further postpone payments if you're experiencing an ongoing hardship, but generally income driven repayment is a better option in those situations.
Borrowers can also use this time to think about loan consolidation. The federal government offers a student loan consolidation program, which in some cases can be beneficial. It can open up new repayment plan options or simplify repayment if you have multiple federal loans with multiple loan servicers. But there are also sometimes downsides to consolidating, including erasing any prior repayment progress you may have made on the underlying loans.
Use your grace period strategically to figure out your best repayment approach for your student loans. Before you do anything, and before you get that first bill, do an inventory and figure out what student loans you have, and what your repayment options are. It’s important to develop a game plan so that you're not scrambling when your grace period ends.
Recertify your loans before your grace period expires by calling us at 1-833-516-2867 today!
Source: https://www.forbes.com/sites/adamminsky/2018/12/21/student-loan-grace-periods-are-ending-soon/#6238ecdf5608
Student Loan Grace Periods Are Ending Soon
Reviewed by Student Loans Center
on
December 21, 2018
Rating:
Reviewed by Student Loans Center
on
December 21, 2018
Rating:
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