Home > Student Loans > Your Student Loan Grace Period Is Almost Over. Are You Ready?

Comments 0 Comments
Advertiser Disclosure


For many who graduated college in May, November is the start of something big: student loan repayment.

Subsidized and unsubsidized federal Direct and Stafford loans have a six-month grace period following graduation, meaning it’s time for May 2013 grads to pay up. (The grace period starts upon a student’s graduation, dropping below full-time student status or leaving school.)

Ideally, graduates are well-prepared for this financial responsibility, because this day has been coming since they took out the loans. Mitchell Weiss, a finance professor at the University of Hartford and a Credit.com contributor, says student borrowers need to have a handle on their loan payments before leaving school, so there is plenty of time to arrange an affordable payment structure, if necessary.

It’s nearly November, so there’s no use fretting over what you should have done (but students and parents of future borrowers, take note: This should be dealt with long before October).

For borrowers entering repayment, here’s what needs to happen.

Determine Your Monthly Payment

You can look at your federal student loan information through the National Student Loan Data System, and you’ll be able to find your student loan servicers there. If for some reason you’re not already in contact with your servicers, reach out and confirm your monthly payments. Check your mail and email to be sure you haven’t missed any correspondence.

Figure Out How to Pay

The next step is to make sure you can afford the payments. If you haven’t yet found a job or are earning less than you anticipated, you may want to look into loan repayment plans that will make the payments affordable. Once again, this is where it is important to do the work well in advance.

“A good rule of thumb is their student loan payment should not exceed 10% of their prospective gross salary,” Weiss said. If it does, “they should really look at trying to get those things adjusted.”

The Department of Education offers a Pay As You Earn plan for eligible borrowers, so those concerned by high student loan payments should see if they qualify. Even if a borrower has procrastinated on making loan payments, the last thing to do is miss a payment.

Loan delinquencies leave a black mark on consumers’ credit reports, which can make it more difficult to access other forms of credit, like home and auto loans or credit cards. Especially for those with little credit history, delinquency is a fast track to poor credit scores.

What to Do If Your Payments Are Too High

Borrowers have to find a way to pay student loans. If your student loan payments don’t fit your budget, it’s your spending that has to change. Maybe you need to sideline that plan to move out of Mom and Dad’s, or split the rent among more roommates. The payments have to come from somewhere.

Even after corners have been cut, the payments can be too much. Concerned borrowers should talk to their loan servicers about consolidation, deferment or forbearance, keeping in mind that such measures could cost more money in the long run.

“You may have to do some things you don’t want to do,” Weiss said. “Debt will own you if you let it get away from you.”

Image: Hemera

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team