Congratulations on graduation! You are now ready to rest on your laurels and reap the rewards of a long road traveled. However, you might have a sinking feeling about upcoming student loan payments.

Whether you have yet to take out your first student loan, are still a full-time student, have just graduated, or are about to begin making payments, this article is for you. A loan’s grace period can be seen as the time where you can live in the bliss of procrastination, however, these tips will set you up to feel confident about your post-academic options.

1. Know Your Grace Period

A grace period is the time between when borrowing has ended and repayment has yet to begin. This can occur for a number of reasons. A loan’s grace period will be activated once you are enrolled less than “half-time”.

If you receive notification that you have entered your grace period and you believe this is a mistake, contact your school’s registrar office as soon as possible to ensure they have reported your enrollment status accurately. This may also be a time to clarify what constitutes “less than half-time” status for your institution if you do believe this is a mistake.

Most grace periods are six months, however, Perkins loans can be nine months long. But not all grace period are created equal. While federal loans are required to offer a grace period, private loans are not. Check with each of your loan servicers (the entity that handles billing and maintenance of your loan) to see how long your grace period lasts. It is also important to ask if your loans still accrue interest during the grace period.

2. Complete Exit Counseling

The best way to learn about your loan is to complete your exit counseling for the loan. All federal loans will have required entrance counseling through studentloans.gov and will, therefore, require exit counseling. You should receive notification to complete this once your loan enters grace, but if not, check with your loan servicer. Some private loans may not offer or require entrance and exit counseling.

While completing your exit loan counseling may seem like a nuisance, use it to your full advantage. Exit counseling holds rich information about all things discussed in this article and more, but more tailored to your specific loan(s).

3. See How Much You Have in Loans to Date

If you are like most students, you avoid looking at the total amount. Don’t be afraid of this number. The more you know about what you owe, the better prepared you are to tackle it. If you are unsure of how to look up how much you owe, check out these resources:

4. Call Your Loan Servicer

The best source of information on anything regarding your loans is your loan servicer who handles the billing and other services for your student loan. If you have more than one loan, be sure to have contact information for each of your loan servicers. If you aren’t sure how to find out who your loan servicer is, go to the National Student Loan Data System or the Consumer Financial Protection Bureau.

Loan Consolidation

When talking with your loan servicer about repayment options, you may want to ask about consolidation if you have more than one loan. This will combine all loans you have in order to make one payment a month, as opposed to multiple payments. However, consolidation is not right for everyone, so be sure you know how consolidation will affect the total amount you end up paying or how it will affect your repayment options.

Refinancing

It may also be worth considering refinancing. Again, this may not be an ideal option for you, the types of loans you have, or the future payment schedule you would like to have, so be sure to ask about all the ways it could affect you. If you believe refinancing will give you a lower interest rate, be sure to also ask how it may affect your eligibility for government programs such as a loan forgiveness program or an income-based repayment plan.

5. Choose a Repayment Plan

When you are in your grace period, be sure to find out what repayment plan you have been automatically enrolled in and determine if it is the right repayment plan for you. Upon considering your current and potential future financial situation as well as intended career path, you may decide to choose an Income-Driven Repayment Plan. These are available for federal loans, but may not be available for private loans.

At the moment there are six different types of Income-Driven Repayment Plans offered for federal loans, so be sure to determine which one is best for you. The Federal Student Aid’s Repayment Estimator may also be a helpful tool for determining what a monthly payment will be for you.

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6. Determine Your Eligibility for Loan Forgiveness

Depending on the career path you choose, you may be eligible for a variety of loan forgiveness programs. A loan forgiveness program usually involves contracting to work for an employer for a set period of time with the agreement that the employer (or other party) will assist in paying all or some of your student loans. Here are some examples below:

Public Service Loan Forgiveness Program

Those working for federal, state, or non-profit employers, may be eligible for the Public Service Loan Forgiveness program. Most of the options under these plans involve lower monthly payments based on your income with the understanding that after a period of time (e.g., 10, 20, 25 years) the rest of the amount left on the loan will be “forgiven,” meaning you no longer have to make payments.

National Service Health Corps

The National Service Health Corps seeks to bring health and mental health care providers to communities without access to health services. In efforts to do so, they offer loan forgiveness programs for early career practitioners. The NSHC’s plans offer to pay up to $50,000 a year toward your loans for working for a qualified employer.

NIH Loan Repayment Program

For researchers, the National Institutes of Health (NIH) Loan Repayment Program aims to attract health professionals to careers in clinical, pediatric, health disparities, and contraception and infertility research. Similar to the National Service Health Corps, the NIH Loan Repayment Program offers to pay up to $35,000 a year toward your loan when working for a qualified employer.

Employer Programs

Your employer may offer loan forgiveness, as does the U.S. Department of Veterans Affairs.

7. Make Payments Early if You Can

“No payments required” doesn’t mean “no payments accepted”. While payments are not required during your grace period, it may benefit you greatly to make payments during your grace period. Your grace period is also a great time to make interest-only payments in order to reduce the size of your loan principle.

8. Make a Game Plan for Other Financial Responsibilities

Your grace period can be the perfect time to get other aspects of your finances in order. For example, pay off those credit cards, open a savings account, or make larger deposits to your savings. When it comes time to begin making payments, you will be used to using that money for financial health, and you might have saved enough for a small financial safety net for life events that occur while you are making student loan payments.

9. Start Making Payments

Remember to never skip a payment. For nearly all loans, there are options to go into forbearance or deferment if you are unable to make payments. A phone call to your loan servicer sooner rather than later always works better in the long run. Missing a payment can drastically hurt your credit score and put your loans into default which will point collection agencies in your direction.

 

It can be tempting to see student loans negatively, but remember to congratulate yourself on the hard work you have done to get where you are in your career and the path you have chosen to financial success and stability.

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Laura Miller, PsyD

Laura Miller, PsyD

Dr. Laura Miller is a psychologist at Virginia Tech’s Thomas E. Cook Counseling Center where she completed her internship. She received her B.S. degree in Psychology at Louisiana State University, received her M.S. degrees in Clinical Psychology from Northwestern State University and Georgia Southern University, and earned her Psy.D. in Clinical Psychology from Georgia Southern University. Dr. Miller enjoys working with clients of all ages individually and in groups with a wide variety of clinical concerns, and is particularly interested in helping those who struggle with depression, anxiety, and identity concerns. Dr. Miller also has a passion for helping clients through crises, trauma, and suicidal thoughts. Her research has focused on developmental theories for emerging adults including the development of emotional intelligence, belief in one's ability to cope with stress, adjustment to college, and family and ethnic cultural influences. In the therapy room, Dr. Miller strives to create a collaborative and open relationship where clients have control. Dr. Miller works from a multiculturally inclusive and integrative approach that focuses on techniques best suited to the client’s readiness for change and self-acceptance. In her free time, she enjoys cooking Cajun dishes from her home state of Louisiana, watching suspense movies, and walking her dog.
Laura Miller, PsyD