If you’ve graduated at the undergraduate or graduate level this past May, congratulations! You’ve worked hard to earn that degree and likely need to catch up on your sleep. However, it’s that time of year… The leaves are changing colors, it’s finally sweater weather…. And it’s also probably time to make that first payment on your federal student loan.
Yikes, I can hear all of you groaning with dread after reading that sentence. The thought of opening your mail and seeing you have a payment due is not the best feeling. BUT, rather than set the mail to the side and bury our heads in the sand, let’s face our fears together!
We’ll start at the very beginning, if you filled out FAFSA and were awarded funds at any point in your education, you likely owe federal student loans. If you have not already, you will probably begin receiving mail or calls regarding your student loans soon. You may be wondering, why am I just now receiving communication about this? Am I behind on payments since I haven’t been paying anything? Has this ruined my credit score?
Take a deep breath and know that it’s alright. The federal government has actually done you a favor by giving you a “grace period.” A grace period is an amount of time given to individuals who have graduated, left school, or who have dropped below half-time enrollment. The only type of student loans that don’t get a grace period is PLUS loans. (However, if you have PLUS loans you may be eligible for a deferment.) The grace period is basically designed to give you time to get a job, and get your finances in order before paying back your loans. Most types of loans offer a 6 month grace period. However, make sure you check on this as some offer a 9 month grace period. During this time, you are not required to make payments, but you definitely can if you want to. Keep in mind that interest is likely building on your loan even during your grace period. So don’t be surprised if the balance is a little higher than what you initially borrowed.
Another nice aspect to the grace period, is it gives you time to figure out a payment plan that works for you. If you’ve received information from your student loan servicer (that’s the people you’ll pay your loan back to), they have probably let you know the expected monthly payment. If that payment amount sounds higher than what you can afford, don’t worry! You have options! Federal loan servicers actually offer several alternatives when it comes to repaying your loans. You will likely be automatically set up for the Standard Repayment plan. This is a 10 year program where you pay down your loan at a fixed amount each month until the loan is paid off. This plan will cost you the least amount in interest over time. However, if you have a large amount of student loans, you may need to look at some other options. There are several programs where your monthly payment is based on your monthly income. These are called the Income Drive Repayment Plans, what type of loans you have will dictate what type of Income Driven Repayment Plan you are eligible for. In addition to these options, you also may be able to extend your repayment period up to 25 years if you look into the Extended Repayment Plan.
As you can see, setting up payments for your student loans and figuring out what repayment plans you are eligible for involves a lot of information. If you are having trouble, reach out to Apprisen and let us know you’d like help with your Student Loans. We offer a free Student Loan Program where we will help you contact your student loan servicer to make sure your monthly payment is affordable.
Happy Fall Y’all!