Repaying Student Loans For New Graduates–Using A Loan Grace Period To Explore Repayment Options On College Loans

As student loan debt remains a major problem for many graduates, those who have recently exited school need to understand that there is an aspect of many student loans, particularly federal loans, that may be used to the student’s advantage when it comes to exploring repayment options that may offer a graduate both affordability and a more efficient repayment timeline. The grace period that many borrowers have after they have exited college can be quite helpful in terms of allowing students to assess their financial situation, what the costs will be when it comes to repaying their student loans not only on a monthly basis but overall, and what route may be best for their particular situation when it comes to erasing this particular type of debt.

Students are aware that options like federal student loan consolidation plans are available, as well as, income-based repayment options that may help students who are simply not making enough money to honor their student loan debt repayment plan. In cases where the minimum amount of a repayment agreement cannot be paid by a particular graduate, these income-based options or consolidation plans may help lower a student’s required payment obligation and help them avoid missed payments if factors like underemployment or even the inability to get a job is a factor.

Also, there are forbearance options that students may take advantage of if, once again, unemployment has caused problems, but for students who may have a decent job and income, there are some who can pay off their loans without consolidating or entering into one of these financial hardship repayment agreements and, as a result, these students may be able to get out of debt faster and at lower overall cost.

The answer to what route will be best for a particular graduate can be explored during this grace period and students must remember that, for federal loans, a Stafford Loan typically offers a forbearance grace period lasts about six months while Perkins Loans may have a nine-month grace period that will also offer graduates the opportunity to review their debt situation. Yet, for private loans there may be no grace period or a shorter timeframe which students have between graduation and repaying their debts, so this will also need to be explored depending on what lender a student has worked with to acquire a private loan for college.

What students must remember is that in some cases smaller loans, in instances where multiple student loans have been borrowed, will be easier to repay as a lower principal amount may be combated and erased quickly rather than consolidating debts and working to chip away at a large principal balance associated with an interest rate as well. Understandably, if graduates do run the risk of missing payments or are in a position where even with proper budgeting in their financial life their student loan is causing a great deal of distress, there are options to get more affordable monthly payments on these loans, but during this grace period graduates need to look at their particular situation to see what plan of attack will be best so that they can get out of debt as quickly and as affordable as possible.