The Inceptia Institute’s student loan spotlight contributor, Allison Smith, is a call center counselor at Inceptia and recent college graduate. Allison will regularly offer her insight and advice on student loan repayment and money management, from what’s happening in the call center to the latest and greatest tips to help students stay on top of their loans.
Today’s Spotlight: I wish I had known my grace period!
Most of the students that I speak with on a daily basis know what a grace period is. In fact, that was one of the only things I knew about my loans when I graduated. Simply put, the grace period is the six month gap between when a student leaves school and when they are required to make their first loan payment. For me, fresh out of college and unemployed, that sounded amazing. I had six months before I had to start paying. Six months until I had to find a job. I wouldn’t even have to think about my loans until then, right?
Wrong. The grace period is a huge source of confusion for many students, especially those who frequently enter and exit school for whatever reason, and those who go through multiple degree programs. Obviously, that six month window is not as simple as everyone thinks. So for today’s spotlight, I’ll clear up some of the common misconceptions of the grace period.
Grace Period Myth #1: My grace period lasts six months. True, most of the time. You get six months UNLESS you have Perkins loans. Perkins loans get a nine month grace period. To find out if you have Perkins Loans, visit www.nslds.ed.gov again. Perkins loans will say ‘Perkins’ next to them. All loans that don’t say ‘Perkins’ will have the six month grace period. (For the Department of Education explanation of Perkins loans, visit http://www2.ed.gov/programs/fpl/index.html )
Grace Period Myth#2: My grace period starts after I graduate. True, assuming you never took more than six months off from school or fell below half-time enrollment status for over six months. Every time you stop taking classes or are under half-time, the grace period starts. If you go back to classes or go over half-time before the six months is up, the grace period will be recycled and start fresh once you leave school again. For most schools, ‘half-time’ means you have to be taking OVER six credit hours at a time. However, contact your school’s registrar or financial aid office to see what they consider ‘half-time’.
Grace Period Myth #3: I get a six month grace period every time I leave school. False. Each loan gets ONE grace period, and once you use it you can’t get it back. Once you’ve used your grace period, even if you go back to school, you will immediately be put back into repayment once you stop taking classes or fall below half-time status. Yes, even if you’re just taking the summer or a semester off. Your servicer will expect payments or some other arrangement during that gap, so plan accordingly. However, if you took out loans for your undergrad program, used your grace period on those loans and then took out new loans for your master’s program, those loans for the master’s program will have their own grace period once you graduate or leave the school for six months. New student loans get a new grace period. So even though you’d have to resume payments on the undergrad loans immediately, the master’s loans would still have that six month gap.
Of course, on occasion, mistakes happen. If your servicer is telling you that you’re in repayment already and you believe you should be in your grace period, contact them immediately and ask them about it. Occasionally they will have you send in enrollment verification from your school to prove that the grace period shouldn’t have been used, but if you can prove that there was an honest error, they will fix it for you. Understanding what you’re dealing with from the beginning of your repayment is key to paying off the loan. Don’t hesitate to educate yourself a little bit further.
Take the next step in repaying your student loans: Check out your loans at www.nslds.ed.gov and note which ones should still have the grace period intact. Contact your servicer immediately with any questions or concerns.
- Keep Your Big Expenses Small: The Big Three
Leaving college can mean a lot of changes, and some of those changes might be pretty expensive. The choices you make can have a huge impact on your day-to-day life, and can mean the difference between living paycheck-to-paycheck and having plenty …Read MoreBy Kate Horrell May 18, 2015
- Student Loan Rehabilitation: A Win/Win for Borrowers and Schools
Within the last two years, changes made to the student loan rehabilitation process have given more defaulted borrowers a second chance by removing the negative consequences of default. Not only have these changes benefited student borrowers, they’ve also been highly …Read MoreBy Dave Macoubrie May 11, 2015
- New Grads: Three Things to Do Right Now With Your Student Loans
Now that you’re out of school, you have an important mission – find a well-paying job and start your life after college. But for most graduates (70% by some numbers), another big challenge you’re going to face is what to …Read MoreBy Robert Farrington May 4, 2015
- Confessions of Two Financial Literacy Interns: Focusing on Our Future
Our Inceptia financial education & marketing interns are here to share some financial lessons they’ve learned while in college. We’re hoping new grads and students find their takeaways relatable as they share their plans to put their newfound financial savvy …Read MoreBy Haley Peitzmeier April 29, 2015
- April is Financial Literacy Month: Celebrate it by Teaching Your Children
Why is Financial Literacy Important? Rob’s book, “What All Kids (and adults too) Should Know About … Saving & Investing,” is a personal finance book that teaches young adults, millennials, and even adults vital money concepts. Visit whatallkids.com to learn …Read MoreBy Rob Pivnick April 20, 2015
- Great Advice for Grads 2015 has been released!
Ahhhh, Spring. It’s that time of year again, and the air is abuzz with new found energy, dreams of summer, and – for seniors – a mixture of excitement and anxiety about graduation and the transition into “what’s next.” …Read MoreBy Haley Peitzmeier April 27, 2015
- The Changing Face of the Traditional College Student
When most people envision the traditional college student, it’s likely they think of young students between 18-22 who are working part time (or not at all), attending classes full time, are largely dependent upon their parents and live on campus. …Read MoreBy Haley Peitzmeier April 6, 2015
- Inceptia Insight Inaugural Newsletter: A Summer in Review
At Inceptia, we work closely with financial aid offices to highlight and address the many critical issues related to student success that are faced on campuses across the nation. This sincere drive to inform and guide is in our nature …Read MoreBy Haley Peitzmeier August 29, 2014
- Back-to-Campus Blues? Let Inceptia Help!
As you prepare for students to head back to campus this fall, you no doubt have a lot on your to-do list. At Inceptia, we’d like to take some of the load off of your shoulders in the coming months. …Read MoreBy Haley Peitzmeier August 7, 2014