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When are Student Loans Due?

Upon graduation you will be presented with a diploma to acknowledge all your hard work. For those with student loans you can also expect to receive a repayment schedule from your loan servicer. Depending on the type of loan you borrowed you might be expected to begin repayment immediately or you could have a grace period that is typically around 6-months after you dropped below half-time enrollment, or graduated.

Student Loan Repayment

Student loans enter repayment when you graduate or drop below half-time enrollment. When the repayment begins will depend on the type of loan you borrowed. Most federal student loan borrowers will get a grace period after they enter repayment before their first payment is due. Expect to be sent a repayment schedule from your loan servicer with your monthly payment amount, due date, number of payments expected to successfully pay off the loan and any other pertinent information needed to make monthly payments.

Grace Period by Loan Type:

A grace period is time given after leaving school and before your first student loan payment is due.

  • Federal Direct Subsidized and Unsubsidized Loans get 6-months Federal PLUS Loans for parents do not have a grace period.
  • Parents with PLUS loans can request a 6-month deferment for after the student benefitting from the loan drops below half-time enrollment. This will mimic a grace period, but it’s not technically a grace period.
  • Federal Graduate and Professional students with PLUS Loans will get a 6-month grace period.
  • Federal Consolidation Loans do not have a grace period. If a loan in its grace period is moved into a federal consolidation loan, the remaining grace period is forfeited.
  • Private Student Loans can range from payment, interest-only payments while in-school, being due right away after leaving school and can be as much as 6-months. Check with your lender to know which applies to you.

Understanding your Monthly Student Loan Payment

When you receive your student loan repayment schedule you will be given the current outstanding principal balance of the loan. If you had an unsubsidized loan or a private loan, and deferred payments while in school, this amount would include accrued interest while you were attending school. This means that the number you see will be more than the amount you initially borrowed due to the added interest. This happens because your lender will likely capitalize (add) outstanding accrued interest to the original principal balance of your loan.

MORE>>>How Does Student Loan Interest Work?

Your student loan servicer will also provide you with a schedule of payments, showing how many payments are needed to pay off the loan given the current balance and interest rate of the loan. Many loan servicers will work out the payment, such that the loan (with interest) will be paid off in the standard 120 payment or 10-years.  That said, repayment periods can vary. If you have a private student loan, your repayment terms will reflect the time frame agreed upon at the time you accepted the loan. If you have a federal student loan, you can choose one of the federal student loan repayment plan options. You will also have the option to change your repayment plan during your repayment term.

Paying Down your Student Loan Debt

The idea of paying on loan for the next decade can be daunting but there are ways to shorten the time needed to pay off your student loan. Some suggestions include:· Make your payments early each month. Paying down the balance, even a few days earlier each month, will save on the amount of interest accrued that month. It might not seem like much at first but over time this could make a difference and shave months off the repayment period of your loan.· Pay extra each month or make extra payments whenever possible. This will again reduce the amount of interest you pay overall and ultimately reduce the cost of the loan allowing it to be paid in full sooner than planned.

More>>>How to Pay Off Your Student Loans Fast

Managing your Student Loan Debt

Life happens and you could very well find yourself facing financial hardships at the end of your grace period unable to figure out how you are going to pay for your loans. For federal student loan borrowers, the US Department of Education offers income driven repayment plans for qualifying loans to help out their financial situation. There are also several student loan forgiveness programs, such as Public Service Loan Forgiveness, for students that enter specific areas of employment post -graduation. Those students that qualify could find their loans forgiven after certain criteria is met.

Refinancing your Student Loan to Save Money

If you find it difficult to pay extra or even to pay the monthly payment on your student loan(s) there are options. If all your loans are federal Direct Loans, you could consolidate them into a Direct Consolidation Loan. This will not reduce your interest rate or the amount you owe, but if you are paying the minimum payment on multiple loans, it is possible the cumulative loan payment could be less than several individual payments.

Another option would be to consider a private student loan refinance. Here you could bundle several loans into one and you could possibly reduce your interest rate which would lower your monthly payment or allow to make fewer payments.  If you have federal loans and are considering a private student loan refinance, please keep in mind, that once you move your loans out of the federal loan program, you will no longer have access to or be eligible for the benefits provided to federal student loan borrowers.

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