When your college days come to an end, one of the first questions that may come to mind is “do I owe money for my student loans once I finish school?” Worrying about your student loans right away may make you feel anxious if you haven’t found a job yet. Your student loans go into repayment once you graduate, voluntarily leave school, or are enrolled less than half-time.
Different Types of Student Loans
Federal student loans usually have a grace period of six months before you have to start making payments. The grace period is given because students usually need time to find a steady job once they’re done with school. Direct PLUS loans for parents and grad students don’t have a six-month grace period.
Private student loans are loans that you may have gotten from a bank, credit union, or another private lender. While some of these loans have a grace period, not all do, so you’ll need to check the terms of your loan to find out when you need to begin making payments.
What Happens if You Drop Out of School?
Many students drop out of college for a variety of different reasons, such as family responsibilities or financial reasons. If you drop out of school, your school notifies your lender that you’re no longer a full-time student. If you have a loan that has a grace period, your payments begin six months later.
For private student loans, refer to the note you signed when you took out the loan to find out when repayment begins once you leave school. You can also contact your lender with any questions on how repayment works on your loan.
Difficulty Making Student Loan Payments
The grace period between the time you leave school and the time when student loan payments are due each month goes by quickly. If you aren’t able to find a job, or if you have other reasons that making payments is difficult or impossible, contact your lender. You may be eligible for an income-driven repayment plan on federal loans. You can also request a deferral or even possibly a forbearance, which may allow you to postpone making payments for a period of time but since interest will continue to accrue on your loan balance, it can be expensive so it’s not something to be taken lightly.
For private student loans, contact your lender. They may have programs for individuals who are experiencing financial hardship. You may also be able to reduce your monthly payment by consolidating your loans for a longer-term and a smaller monthly payment due each month.
Protect Your Credit
Don’t just ignore your student loans if you’re having money trouble. Paying late shows up on your credit report and can make it difficult to borrow money for other purposes in the future. Protect your credit by paying loans as agreed and if you have credit cards, keep the percent of available credit you use low.
It’s a good idea to check your credit report periodically to make sure the information being reported is accurate. Any incorrect information on your credit report should be disputed immediately. Dovly can help with this process. We’re an automated credit repair engine that tracks, manages, and helps you fix your credit. Get in touch with Dovly today to find out more.