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How can I properly give an answer to the question, “when referring to student loans, what is a grace period”?

I would like to be a beneficiary of Federal Perkins Loan and other student financial aids, but my friend has asked me, “when referring to student loans, what is a grace period?” Please help me to give him an answer. I also want to be enlightened on the best method that I can use when paying back student loans after my graduation. On the other hand, briefly help me understand the meaning of education loans. Finally, I will appreciate if you can provide me with information regarding the description of the phrase ‘to defer student loans repayment’.

Carlton Burgess

in Student Loans

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Ralph Lopez on June 21, 2018

Over 50% of students in the United States rely on federal student loans and other financial aids to support their studies. The case is the same in most other countries that promote learning for its citizens. Financial aids are important when it comes to assisting many students to realize their academic dreams. However, the most challenging times when it comes to repaying the loans. It is estimated that over 80% of graduates between 2015 and the present time have not been able to repay their loans. It is also projected that this number may rise in future due to the increasing rate of unemployment that is being witnessed at the moment. Basically, an education loan is a type of loan extended to a parent or student to support the child education and other related expenses.

The question “when referring to a student loan, what is a grace period?” is very common among students. In order to tackle it appropriately, you will need to begin by properly defining the term ‘grace period’ and then followed by a brief description of allowable durations before a student is supposed to start making loan repayments.

Well, to help you get started, you will define a grace period as the waiting time between when one is allocated a loan and when he or she is supposed to start repaying. In the United States, you are permitted to take six months after graduation when you take Stafford loans. You’re also expected to begin repaying your loan when you drop or leave college during the period less than half of the enrollment time. Older Stafford Loans have longer grace periods. Normally, if you took subsidized loans, interest will not accrue while you’re still pursuing your education or during grace periods.

In some cases, grace periods can prolong to thirty-six months at maximum if you will be serving an active duty in the defense forces. Repayments should always start after the waiting period is over. Note that you can only use one grace period per loan and you will lose it if you choose to consolidate your loans

Deferring student loans repayment is a formal extension of the loan repayment period, or in the context where you had started making your payments, you will stop making your monthly remittances as per the regulations of your lender.

When paying back a student loan, it is always important to consider submitting your monthly repayments for some period then applying for a deferment. This will temporarily enable you to save and improve other parts of your life. It can be helpful when you encounter challenges such as long a job, unexpected medical expenses or any other financial problem.

In case interests are accruing on your loans before the grace period is over, it is advisable that you start making payments cushion the interests and avoid interest capitalization (a case whereby the accrued interest is added onto the principal credit/loan, and then a new interest is determined to base on the current amount).

Cynthia Baker2 years ago

Education loans are the most common form of student aids in most parts of the world. Grace periods allows college graduates to plan and at least find a job that can assist them in repaying their loan debt. In addition to Stafford, there are other loans that include PLUS Loans, Private Loans and Perkins Loans among many others. When it comes to PLUS Loans, expect no grace period. You should begin repaying your loan two months after the last loan disbursement. Nonetheless, there is six-month forbearance for the loans borrowed as from the 1st of July, 2008. The extra six-months will be automatically awarded if you apply for an in-college deferment. Additionally, you will have a nine-month grace period if you borrow a Perkins Loan and you will not be subject to accruing interests during this time. Finally, grace periods are also available to students opting for private loans. Make an effort to contact your lender and ask for clarification regarding specific waiting durations. 


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