A grace period is a time between when you leave school and when your first payment is due. During a grace period, some interest accrues, but you don’t yet owe payments.
Federal student loans have a grace period of six months. With private loans, it varies. For example, Earnest gives borrowers a nine-month grace period.
Regardless of how long it lasts, after the grace period, loans enter the “pay-up” or repayment period.
Don’t just sit around and wait for the grace period on your student loans to expire. You need to make a plan so that you’re ready to manage your student debt.
Below, we’ll cover several steps to take before your student loan grace period ends.
1. Create a list of your private and federal student loans
Before you can tackle your debt, you need to know some details—like how much you owe overall, how much you’ll owe each month, and who you owe it to.
If you don’t already know who your lender or loan servicer is, you can log in to Federal Student Aid to find information about your federal student loans. Use your FSA ID to log in. This is the same login information used when filing the FAFSA.
For private loans, ask your cosigner for details or request a credit report for free from AnnualCreditReport.com. The credit report will list any debts you owe, including information about the lender.
On your list, include the lender’s name and contact information, the individual loan balance, the corresponding interest rate, and the monthly payment.
2. Update your contact information with your lender
Call or go online to update your contact information with your loan provider(s). Make sure they have an updated address, email address, and phone number. This is how you’ll receive notice of upcoming bills, changes to your account, or other communications, including when your repayment period starts.
3. Create or update your budget
Create a monthly budget that accounts for your student loan payments. Apps like Mint can help you track all of your accounts and visualize the money you have coming in and out each month. Learn how to make a budget that works for you here.
If your budget doesn’t have enough room for your student loan payments, you have three options:
Cut back on other expenses
Making a budget will reveal the areas where you spend too much or go over budget regularly. For some, it’ll be pretty obvious where they need to cut back. For others, it might take a bigger move like a change in living situation.
Here are a few ways you can start trimming your budget:
- Lowering housing costs by downsizing, moving back home, or adding a roommate
- Cooking for yourself instead of going out for coffee, lunch, or dinner
- Getting rid of monthly media subscriptions and using free library resources instead
- Removing yourself from situations that trigger impulse buying—window shopping, browsing Amazon, multi-level marketing parties, etc.
Make more money each month
Increase your earnings so that you can cover your expenses. Look for a higher-paying job, ask for a raise, or earn some side income. Popular side hustles include babysitting, delivery driver, tutor, online shop owner, and freelancer writer or graphic designer.
Lower your student loan payments
Enroll your federal student loan debt in an income-driven repayment (IDR) plan and/or refinance your private loans to a lower interest rate or longer-term to decrease how much you owe each month. With an IDR, you could end up owing as little as $0 each month.
More on both below.
4. Investigate your repayment options
You aren’t tied down to a single repayment option. Look into the different federal repayment plans, federal consolidating, and private refinancing.
Federal Repayment Plans
The federal government offers standard repayment, graduated repayment, extended repayment, and income-drive repayment options for federal student loan borrowers. You’ll want to join the right plan so that you’re all set when payments begin. To pay off your loans the fastest, go with whatever plan has the highest monthly payment that you can afford.
The default repayment plan is the standard repayment plan, which has a 10-year term with fixed payments each month. Learn about your other federal repayment options here.
Reach out to your student loan servicer to enroll in a repayment plan. Borrowers who want to stay in the standard repayment plan don’t need to do anything. Borrowers interested in Public Service Loan Forgiveness need to enroll in an income-driven repayment plan.
Federal Loan Consolidation
Consolidating your federal student loans puts all of your eligible federal student debt in a single loan with a single payment. It won’t change how much you owe, or the interest owed, but it will put your debt with one servicer. This means only one place to make payments rather than several.
Federal consolidation keeps your federal borrower benefits intact too.
Private Student Loan Refinancing
Private student debt refinancing is similar to consolidation, except you get to choose the lender and go after the loan terms you want. Refinancing helps you go from multiple lenders to a single lender for your private loan payments. It can also lower your monthly payment, help you pay off your loan faster, save you money over the life of your loan, and/or switch you from risky variable rate loans to a lower-risk fixed-rate loan.
While you can refinance your private and federal student loans, we don’t recommend refinancing federal student loans at this time. However, rates for private refinancing are low, so now is a great time to try to refinance your private loans.
As a new grad, you might have trouble getting approved for private refinancing let alone the lowest rates. Fortunately, many student loan refinance companies let graduates refinance with a creditworthy cosigner. And, some (like CommonBond and Splash Financial) offer cosigner release after a set number of on-time payments.
5. Set up autopayments
Your student loan servicer will notify you before your first payment is due. Make sure you set up auto-payments before the first payment date. That way, you’ll never miss a payment.
With many private lenders, enrolling in autopayment also gets you a 0.25% interest rate discount.
6. Make payments as soon as you can
Payments made during the grace period have a big effect on your student loans, especially for borrowers whose loans went into administrative forbearance during the Cares Act student loan relief period between March 13, 2020, and December 31, 2020.
Any payments made before repayment begins to pay down outstanding accrued interest and then directly attack the principal. Bringing your loan balance down while interest isn’t accruing, or monthly payments aren’t due will result in a lower monthly payment when payments do begin. Plus, you’ll be a few months closer to paying back your student debt.
A Note on Grace Periods During the Coronavirus
The CARES Act altered grace periods for that latter half of 2020. In March 2020, the Department of Education (ED) placed all qualifying federal student loans in administrative forbearance. This paused payments and set all interest rates to 0%, regardless of subsidized vs unsubsidized status.
If your grace period overlapped with administrative forbearance, interest doesn’t accrue during the overlap. As of now, administrative forbearance lasts through December 31, 2020. When it ends, loans that still have time left in their grace period will go into a normal grace period, where payments aren’t due, but interest does accrue for unsubsidized loans. Loans that don’t have time left in a grace period will go right to repayment.
Recap of Steps to Take Before Your Student Loan Grace Period Ends
Head into student loan repayment with confidence. Take the following steps so that you know what you owe and how you’ll pay it back:
- Create a list of your private and federal student loans
- Update your contact information with your lender
- Create or update your budget
- Investigate your repayment options
- Set up autopayments
- Make payments as soon as you can
Learn more about managing student loans with these articles:
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. (2)$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. (3)This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 1/27/2021. Variable interest rates may increase after consummation.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
Ascent: Ascent’s undergraduate and graduate student are funded by Bank of Lake Mills or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 11/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.
*The minimum amount is $2,001 except for the state of Massachusetts. Minimum loan amount for borrowers with a Massachusetts permanent address is $6,001.