Repaying Student Loans: When and How


Repaying Student Loans: When and How

Once graduation comes and goes, loan repayment is not far away. It is imperative to know exactly who the loan-holder is (or are); the amount and due date of each monthly payment; and where to send the payments. In virtually every case, loans may be repaid via automated system as a direct debit from a checking account. It is also important to know any and all consequences regarding missed payments; whether interest rates decrease based on a string of timely payments; and whether loans may be forgiven or placed in forbearance depending on certain life and financial events.

Many student loans have a six-month grace period, meaning that repayment does not begin until six months after graduation or leaving the program. This benefit is meant to give recent graduates a chance to get on their feet before the sometimes steep monthly payments set in.

The existence and length of a grace period depends on the lender and the loan agreement signed when taking out the loan. It is imperative to know the terms of this contract before assuming any grace period exists.

Another benefit of the grace period is that federal loans may be consolidated during this time. This type of consolidation gives borrowers the opportunity to make one larger monthly payment rather than several smaller payments. Additionally, the interest rate may be reduced upon consolidation.

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