Grad school | June 20, 2022 | Lisa Litant
When you graduate or leave college, you’ll usually enter what’s known as a grace or separation period for your student loans. What’s a grace period? It’s a time—usually six months—after you leave school before you need to start paying back your student loans with full (principal and interest) payments. The reason lenders give you a student loan grace period is so you’ll have time to transition from school to post-college life, and get settled financially before you have to make loan payments.
If you chose to defer making payments while you were in school, you won’t have to make payments during your grace period either. But if you’ve been making in-college payments, you’ll generally continue those for the six months. In all cases, when your grace period ends, your monthly payments start to include principal and interest until your loan is paid off. Usually these will be higher than any in-school payments you may have been making.
Here are some tips for getting ready to pay back your student loans during your six-month grace or separation period.
Your grace period is a good time to figure out how your money flow’s going to work now that you’re out of school. Creating a budget can help you understand the balance of income with monthly expenses like rent and food…and student loan payments. For free help starting a budget and planning your financial goals, YourMoney Pro can help.
Even though payments may not be required, you can always make payments during grace/separation. Paying even a little extra will help you get ahead and lower the amount you owe. Plus, it can help you reduce your total loan cost. Every little bit helps to pay down your loans in the long run. Get more tips on how to pay off your student loans faster.
Your grace/separation period is all about planning. The more you can do during your grace or separation period to prepare for your full monthly payments, the smoother your transition can be. And you’ll be on your way to paying off your student loans in full.