Congratulations, class of 2014! Graduation came a lot faster than you expected, right?
I’m sure it already feels like the clock is ticking on a few things, like finding a job or getting your own apartment. However, don’t forget one more: If you took out federal student loans, your grace period has begun too.
Loans may not seem like a priority right now if your payments haven’t started. But, just like graduation, they’ll be here before you know it. Prepare accordingly by handling your grace period, well, gracefully. Here’s how.
1. Find Out How Long You Have
A student loan’s grace period begins when you graduate, withdraw, or drop below half-time enrollment. When the grace period ends, loans go into repayment and your first payment is due.
The length of your grace period will depend on the type of loans you have:
- Stafford loans receive 6 months
- Perkins loans receive 9 months (they also get a 6-month “grace” after most periods of deferment)
PLUS loans are trickier. Grad PLUS loans disbursed as of July 1, 2008, have a 6-month grace period. However, if you borrowed these loans before that date, you would have had to request that 6-month period.
Parent PLUS loans go into repayment 60 days after they are fully disbursed. So, if there is a disbursement in the fall and spring, the loan would go into repayment 60 days after the second disbursement. However, parents can request a 6-month grace period to defer repayment until after their son or daughter graduates, withdraws, or drops below half time.
2. Your Timing Is Everything
Grace periods are all or nothing, so if you plan to continue your education, keep an eye on the calendar.
For instance, if you had Stafford loans and re-enrolled at least half time within 180 days (i.e., 6 months), your grace period would remain intact—like you never used it. The next time you dropped below half time, you could use the full 6 months again. But, if you went back to school on day 181, your grace period would be gone for good.
If you are taking a leave of absence, your grace period will begin the day you began your leave. If you go back to school after 180 days (a leave can last up to that long), you can get an in-school deferment. However, your loans would enter repayment immediately upon leaving school.
3. Know If You’re Responsible For Interest
During your grace period, your loans may or may not accrue interest. If yours do, consider paying this interest as it accrues to counter any potential increase in the amount you owe.
Perkins loans and some subsidized Stafford loans (those disbursed before July 1, 2012) do not accrue interest; however, subsidized Stafford loans disbursed between July 1, 2012, and July 1, 2014 do not get this subsidy.
Right now, the government will subsidize loans disbursed as of July 1, 2014, during their grace period. It will be interesting to see if lawmakers extend the current no-subsidy model for budgetary purposes.
All unsubsidized loans (unsubsidized Staffords and PLUS) always accrue interest while in their grace periods.
4. Take Action
Be aware of how much you borrowed. Go to the National Student Loan Database System (NSLDS®) to view all of your federal student loans, how much you have to pay back, and who your loan servicer is.
Check that each of your servicers has your current address, and make sure to update them any time that you move. Just because you don’t get the bills, doesn’t mean you aren’t responsible for making the payments.
Speaking of payments, if you haven’t received anything yet showing you what your payments will be, find out! Contact your servicer or log on to their site. You can also use SALT’s Repayment Navigator to see what repayment option works best for you before your first payment is due.
Are you preparing for your payments before they’re due? Let us know your plan in the comments.