The time between graduation and when you must begin making payments on your student loans is known as the grace period. The length of time can vary, but understanding what that time is meant for, and what you can expect once it ends sets you up for as seamless of a transition as possible. Typically, this period is six months long but does vary from lender to lender, so organizing your various loans and acknowledging the different expectations associated with them ahead of time allows you to align your current finances with your future responsibilities.
Total Amount Owed
Look at your various student loans and their origination details. It is likely that you borrowed from multiple places, and each lender will have its own unique terms and totals regarding your repayment. Understanding the difference between your lender and your servicer is key here. A lender is in reference to where the money comes from, while a servicer applies to the agency working on behalf of the lender. So, when you are researching to find out exactly how much total student debt you have, you will want to search through your servicer. You can research the do’s and don’ts before your student loan grace period ends as they pertain to calculating exactly what you owe and when your repayment will begin.
Little known nuances like updating your phone number and address are also important facets of your grace period. If you have recently graduated, it is likely that you have also changed your residence. You want to ensure that your servicers have your most recent contact information so that any updates or notifications that occur while you are waiting to begin repayment reach you successfully.
Before your grace period ends you will have had to pick a repayment plan, so use that time to examine the options and play around with how they each do, and do not, make sense for you personally. The type of loan affects the type of plans you are eligible for. For example, if you have federal student loans and your monthly payment is too high you might qualify for an income driver repayment plan, whereas with private student loans that option may be less likely. Keep in mind however that paying less monthly can result in a longer lifespan for your loan, which will equal more interest accrued, and ultimately a larger total repaid.
This is partially what a grace period exists for, to give you as a borrower an opportunity to learn about your loans, create a repayment plan, and organize your finances in a way that accommodates the existing demands on your budget plus the looming responsibility of paying for your education.
It is also an option to begin to pay back your debts before the close of your grace period. If you are in a financial position to make early payments this can have positive long-term benefits. Interest can make a huge impact on what you will student loan interest deduction eventually pay back in total. Understanding that you can make payments during the grace period in an effort to lower overall interest totals is a valuable piece of information.