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.
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