When To Consolidate Your Student Loans
Who Should Consolidate Their Student Loans?
I Have No Money to Continue My Education, is there Anyone to Help Me?
Do I Need to Have Good Credit to Get Student Loans?
Can I Consolidate My Student Loans While I’m Still in School?
Starting Salaries for College Grads Suffering During Recession
A grace period refers to a specific amount of time during which borrowers do not have to make payments on their student loans after graduating or dropping below half-time status. With subsidized federal loans, no interest is accrued during grace periods or periods of deferment. On the other hand, with unsubsidized federal loans and private student loans, interest will accumulate during these periods. Grace periods vary considerably from loan to loan, and many borrowers are confused by how and when to use them. In this post, we’ll give you some tips on understanding your student loan grace period.
Stafford loans have six-month grace periods. Borrowers can use their grace period when they drop out of school, reduce their class load to less than half-time status, or graduate. If borrowers allow their Stafford Loan grace period to expire without returning to school, they will not be eligible for another grace period in the future. On the other hand, if the borrower re-enrolls in school with at least half-time status and files the correct student deferment form, he/she will be granted another six-month grace period. One of the questions Stafford borrowers ask the most is if they can use a new grace period after the conclusion of a deferment (i.e., an economic hardship or unemployment deferment). With Stafford loans, the answer to this question is no—once the first grace period expires, borrowers will not receive another.
Once the borrower leaves school, Federal Perkins Loans have a grace period of nine months. If the borrower returns to school during the grace period with at least half-time status and files the appropriate form, he/she will be allotted a new grace period. Even if the borrower allows the nine-month grace period to expire and then returns to school, he/she will be eligible for a new six-month grace period upon exit from school. Another advantage of Perkins Loans is that they grant at least a new six-month grace period every time the borrower qualifies for deferment, regardless of the type of deferment.
Many other federal loans are available to students, all of which have different terms and conditions governing their grace periods. Likewise, many private student loans also have grace periods, though the loan usually still accrues interest during these times. To find out the length and terms of your grace period and when you can use it, consult your loan promissory note. The note should contain the relevant details about your grace period. If you cannot find your promissory note or do not understand the information it contains, contact your lender. It is a good idea to contact your lender when your grace period is about to expire anyway to ensure that they have the correct contact information for billing purposes.
