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Does anybody know when referring to student loans, what is a grace period?

I am a first-year university student undertaking a degree in economics, and my family is facing a financial crisis now. I am in limbo. I don’t want to drop out from the university because my future career is at stake.  I am looking for a bank that offers education loans with low-interest rates to enable me to complete my degree program. My friend told me that the federal student loan program is the best. But, when referring to student loans, what is a grace period? When will I begin paying back student loans? Am I allowed to defer student loans?

Whitney Matthews

in Student Loans

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Kathy Robinson on June 12, 2018

A student loan is indeed the best option for you to complete your degree. You are eligible for a federal education loan and if that fails to go for the private student loan and make your dream come true. There are some student loan options available; FASFA is one of them. FASFA loan is federal funding and is much cheaper than private loans; you can easily qualify for it as long as you fill out the FASFA application. If this option fails there is still another option: get a private loan with a cosigner added in to enable you to qualify for a lower interest rate.  

What is a grace period, when referring to student loan? This question is the most frequently asked question. The grace period is the period after your graduation, leave school or drop below the half-time enrolment. Grace period gives you time to settle down and select an appropriate payment plan. Note that not all student loans have a grace period; some enter the repayment immediately the full disbursement is done, but you may ask to defer a student loan.  It is good to always contact your credit servicer on their terms and conditions concerning paying back the student loan to avoid penalties.

For most student loans, the grace period is six months after full disbursement. The grace period may change according to specific circumstances:

  • Returning to school before the end of the grace period bestowed upon the loan- if you decide to go back to school before the grace period elapses you are eligible for an increase in your grace period.
  • Loan consolidation- this is the process of combining one or more loans into one new loan. If consolidation happens during the grace period, you will begin repayment after your direct consolidation loan is paid out.
  • Return from active duty- you will receive a six month grace period after return from military duty that is if you were called 30 days before your grace period elapsed.

Ensure that you pay your student loan on time. The monthly payment depends on the:

  • Type of loan
  • Amount of money borrowed
  • Interest rate
  • Repayment plan

Make a payment on a monthly basis; pay more than the amount to reduce the interest accrued on the total loan. In case you face difficulty in making your monthly loan repayment, contact your loan servicer immediately so that you can change your loan repayment plan to suit your income. 

Ronald Miller2 years ago

I think I can answer this question. The grace period is the waiting period before you begin paying back a student loan that is after graduation. It can be 3 years or six months depending on the loan option.  Stafford loans, for instance, have a grace period of six months; PLUS Loans have no grace period repayment of PLUS loans begins sixty days after the final disbursement. The Perkins Loans grace period is nine months. Private loans also have a grace period, but they vary from lender to lender, always ask your lender on when the repayment begins to avoid penalty.  You can apply for a deferment or forbearance in case you experience economic hardship. Never abscond your loan repayment. Loan repayment is mandatory. In case of a loan default, legal action will be taken against you. Don’t ruin your future borrowing ability for not repaying your loan fully. Make small monthly installments. 


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