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How to Take Advantage of Your Student Loan Grace Period



By Catherine Groux
Posted November 05, 2012 12:00 PM

Students should use their grace period wisely.
Students should use their grace period wisely.
When students take out federal loans to pay for their associate's or bachelor's degree, they may be given what is known as a grace period when they graduate, leave school or drop below half-time enrollment. During a grace period, students might accrue interest on their loans, but they are not required to begin repaying them. This gives them a chance to find a job, settle their finances and choose the best repayment option.

It is important for students to use their grace periods wisely to ensure they will be financially stable when they must begin repaying their loans. Here are a few things degree seekers should be sure to do during this time:

Gather Loan Information

The U.S. Department of Education (DOE) states that during a grace period, students should first make note of all the loans they took out to finance their college degree. Using the National Student Loan Data System's website, students can log in to see exactly what they borrowed with federal loans, but they should also keep track of the private loans they took out to get an accurate view of their financial situation.

Speak with a Loan Servicer

Students should also be sure they contact a loan servicer, who can help them choose the best repayment plan, understand loan consolidation and complete other tasks that will be vital to repaying their loans. It is important to note that individuals may have more than one loan servicer, so it is critical to double check this information on the National Student Loan Data System's website, the DOE states.

Create a Budget

Before students can even begin thinking about how they will repay their loans, they need to assess their budget, Dave Macoubrie, spokesman for the National Student Loan Program, told Fox News. In doing so, individuals will get a better idea of how much they can afford to put toward their loan repayments each month. This, in turn, will help student choose the right repayment plan. 

Choose a Repayment Plan

After speaking with a loan servicer and analyzing their budget, students should have a good idea of what their repayment options are and what the best plan for them will be. Individuals can change their repayment plans at any time, but they should keep in mind that oftentimes, the more they extend the time it takes to pay back their loans, the more money they will need to pay in interest.

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