Knowing when does student loan repayment starts can help you manage your finances and debts more effectively.
Student loans are one of the most challenging parts of continuing schooling past high school.
However, with the proper timeline in mind, you can begin putting money away so that you’re prepared when repayment time comes.
When Does Student Loan Repayment Start?
Student loan repayment terms typically depend on the lender you’re working with.
If you are working with a private lender compared to federal loans, the payment schedule could differ.
Also, the type of loan you acquire could affect when it’s time for you to pay it back.
For the sake of this guide, we’ll explain the most common rules for the majority of students with loans.
The vast majority of lenders follow a similar schedule to federal student loans, making them easier to manage.
It is most likely that your student loan repayment will become active once you graduate or leave school.
It could also come into effect if you begin taking classes below half-time enrollment, such as a casual one or two classes.
This point is why you must consider working while in school, so you have some money available for repayment after graduation.
You’ll need to check the payment terms for your individual loan, as the precise repayment date differs from student to student.
For example, your payments could begin in May, while another student’s plan could start in June of the same year.
The type of loan you acquire could also affect the payment schedule for your student loans.
After Grace Periods
As mentioned, the type of loan you receive could mean that your payments could begin later.
For example, you will have access to a grace period if you obtained a direct subsidized or unsubsidized loan.
Also, students who have received a Federal Family Education Loan are eligible for a grace period.
During the grace period, you will have a certain length of time (typically six months) before payments begin.
This lapse in payments can be significantly beneficial to help you get your income prepared for repayment.
Is My Loan Eligible for a Grace Period?
Let’s take a look at the different types of loans eligible for grace periods.
Direct Subsidized and Unsubsidized Loans
With either of these loans, you’ll receive a six-month grace period.
This process means you won’t have to worry about repaying your student loans for six months after graduation.
Although PLUS loans don’t receive a specific grace period, you have access to a six-month deferment.
This benefit only applies if you received a PLUS loan as a professional or graduate student.
Once you graduate, drop below half-time enrollment, or leave school, your six-month deferment could begin.
During this period, you won’t have to make any payments.
Also, parents who applied for PLUS loans can request a six-month deferment after their child graduates.
For more information, it’s best to contact your federal loan servicer.
Another type of loan that could be eligible for a grace period is Perkins Loan recipients.
Depending on your loan agreements, you could receive a grace period between six and nine months.
What Is Student Loan Forgiveness?
When trying to figure out when you have to pay your student loans back, you’ve likely come across the term “forgiveness.”
Student loan forgiveness can be a significant lifesaver for many individuals who have found it impossible to pay their loans back.
However, they are not easy to get your hands on and are often only applied to specific situations.
Some types of forgiveness can erase your student debt in total, while others only delay payments for specific periods.
Let’s explore a few different types of student loan forgiveness you could be eligible to receive.
COVID-19 Emergency Grants (Federal and Private)
If you are a federal student loan recipient, you could be eligible to receive COVID-19 emergency grants.
You might also be eligible for some savings if you’ve worked with specific private lenders for loan refinancing.
Although these grants aren’t designed to forgive your loans, they can assist with emergency expenses.
Some students could be eligible to receive grants that assist with covering:
- Course Materials
You could receive these benefits if you can prove that your regular campus operations have been disrupted due to COVID-19.
Your post-secondary school must meet specific criteria for receiving the grant.
Also, you’ll need to consider the grant amount and how it’s distributed among the student population.
Typically, universities and colleges will have all of this information through their student aid office.
Total and Permanent Disability Discharge (Federal and Private)
Both federal and private lenders can offer loan forgiveness in the event of total or permanent disability.
However, with private lenders, it is important that you first confirm that this benefit is available.
If you have experienced a total or permanent disability and cannot work, your loans can be forgiven.
Keep in mind that you will be required to provide medical records for a set period proving your disability.
It’s also likely that your working activities will be monitored for a specific length of time before becoming eligible.
There’s no guarantee that students can receive this type of coverage, but it can be a significant help for those in need.
Public Student Loan Forgiveness (Federal)
Public Student Loan Forgiveness, or PSLF, is a helpful tool for managing your loans in specific circumstances.
People who are employed by federal, state, local, or tribal U.S. governments could be eligible for this relief.
You might also be able to obtain this forgiveness if you work for a not-for-profit organization.
The central premise of PSLF is to help individuals with paying off the remaining balance of their direct student loans.
However, to be eligible, you must have made at least 120 months of payments under a repayment plan.
These payments must be made while you’re working for a full-time employer to receive forgiveness.
There are a few other qualifications you must meet to be considered, such as:
- Have made 120 qualifying payments
- Have been repaying your loan under qualifying repayment plans
- Be the owner of direct loans
- Continually working full-time for an organization or agency
- Be employed by specific federal, state, local, or tribal agencies
Administrative Loan Forbearance (Federal and Private)
Another type of loan assistance you could receive with federal and private loans is administrative loan forbearance.
This process helps you stop making payments temporarily if you’ve encountered emergencies or hardships.
With private lenders, you will typically be able to receive forbearance if you’ve recently lost your job.
Instead of eliminating payments entirely, you could also use forbearance to make smaller payments.
In most instances, you will have to prove that you have financial difficulty repaying loans due to extenuating circumstances.
Alternatively, you could be advised to apply for income-driven repayment plans.
Income-driven repayment plans allow you to manage your existing debts and redetermine payments that fit within your income.
This process can often be preferred, as you won’t be letting go of payments but instead coming up with more affordable monthly payments.
How to Pay Off Student Loan Faster
At the end of the day, most students will be in a situation where they are responsible for paying their loans in full.
Even with substantial programs for loan forbearance and forgiveness, many students find themselves ineligible for relief.
Using these key steps, you can better manage your finances to start paying your school debt down faster.
Step 1: Find Out What You Owe
The very first thing every student should do is make a list of the total amounts they owe.
You’ll want to account for money borrowed from family, federal loans, private loans, credit cards, and more.
You can then rank them from highest to lowest priority, depending on what you want to pay off first.
Once you have a list of your debts, you can get a good idea of the final amount you will need to pay back.
Depending on the amount, you can then decide what your next steps should be.
Step 2: Consider Student Loan Consolidation
Student loan consolidation is a fantastic way to streamline all of your payments into one.
Instead of owing money from six or seven different people for school expenses, you’ll have a single monthly payment.
You will need to work with a refinancing company to begin this process.
Student loan refinancing has an impressive number of benefits, such as managing your debts, lower interest rates, and several lender-specific perks.
Above all else, it helps ensure you can pay your student loans back faster with affordable rates.
Step 3: Make a Budget
Regardless if you decide to use debt refinancing or consolidation or not, making a budget is essential.
You already have all of your school-related debts laid out, so it’s time to consider other expenses.
You’ll want to create a budget that includes your living expenses, entertainment purchases, and more.
By creating a budget, you will have an idea of how much you typically spend compared to your income.
Using this information, you can effectively manage where your money will begin making headway on your debt.
If you’re wondering when does student loan repayment start, the answer is typically whenever you leave school.
Students who reduce their hours below part-time will also be responsible for starting their payments.
It is important to confirm the payment terms with your specific loan to know when you should start making your payments.