Student Loan Grace Period After Graduation
Graduation is an obviously happy time for a student. It’s the culmination of years of hard work and personal commitment, and student loan companies know this. That’s why, as the dust settles, they hold off on sending new grads the first of many bills for a while. But it’s important to use the student loan grace period after graduation carefully and properly, and we are here to show you how.
What Is a Grace Period? And What Should I Do With It?
First, what is a grace period? As an example, the University of California Los Angeles defines a grace period as a set amount of time during which students are not expected to make payments on their loans – meaning that there are no late fees if no payments are made during this time. The Federal Stafford Loan offers a six-month grace period following the date of graduation, and the Federal Perkins Loan’s grace period is nine months.
A grace period can – and should – be used for some much-needed rest, but it’s also a chance for the new graduate to put things in place for the next stage of their life. There are jobs to apply for, job offers to accept, and savings to build in time for that first loan bill. Thus, the grace period is also a time of preparation for the repayment period. This is such an important dynamic to the post-graduation grace period that US News & World Report listed it first in their list of “6 Little-Known Facts About Student Loan Grace Periods.” Other facts include:
- Some loans have accruing interest during grace periods (GradPLUS and PLUS loans, as well as most private loans); others (like Stafford Loans and Perkins Loans) don’t.
- Simply not having a payment due is no reason to not make payments, as doing so keeps the interest on the loan’s principal down.
- Some federal loans will grant an extension on the grace period if you are still unemployed when the initial period ends, but you will likely have to justify your inability to find a job six months after you graduated.
On that last point, US News suggests using the time offered by the grace period to talk to a loan servicer if it looks like you might not be able to start making timely payments. The loan servicer will be able to suggest options to avoid incurring late fees and other penalties but will take a dim view of your case if you bring this up only after your grace period expires. Thus, using the grace period wisely – both in terms of rest and proactivity – is crucial.
Similarly, the Department of Education published a list of things that former students can do to keep on top of their student loans, even while enjoying their graduation bliss. Some of the strategies are quite simple, such as making sure you have all your student loans organized, knowing their individual terms, payment schedules, and the dates their respective grace periods expire.
Making the Most of Your Grace Period
A grace period is a very important part of life after graduation. It should absolutely be used to decompress and focus on yourself for a little while, but the (approximately) six months afforded by grace periods after graduation should not be purely about self-indulgence. They should be about preparing for the next stages of life: getting a job, building capital for yourself, and paying off your student loans. We want to make sure that you get the most out of your grace period, which is why our website has resources and information about contacting loan servicers, understanding the details of your student loan, and being in the best possible position to make your first payment when your grace period ends.
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