How to get ahead on your student loans before your grace period is up

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How to get ahead on your student loans before your grace period is up


After you graduate from college, it's time to start thinking about your student loans. Luckily, most federal student loans offer a grace period, which grants borrowers a period of time to get settled before their first payment is due.

While you're not required to make payments during your grace period, getting a jump start on your payments can help you eliminate your student loan debt more quickly.

What's a grace period?

If you're lucky, you'll find a job right after college, but more realistically, it might take a few months to secure a job. Grace periods are designed to help you get financially settled and prepared before your first student loan payment is due.

"The grace period typically starts after the student graduates or drops below half-time enrollment [when you attend college for 6 to 8 credits per term]. In many cases, the grace period is six months, though the Federal Perkins loan has a 9-month grace period," says Mark Kantrowitz, financial aid expert and publisher of college website

While most federal student loans offer a grace period, this doesn't apply to all federal loans. For example, PLUS loans have no grace period, and private student loans typically don't either, though policies may vary by lender.

Even if you have a grace period and aren't required to make payments right away, that doesn't mean your loans aren't costing you money. In most cases, your student loans will accrue interest during your grace period.

This means that depending on your balance and interest rate, you could end up accruing hundreds of dollars each month in interest.

Get in touch with your loan servicer.

Your loan servicer manages your student loan payments and can play an important role in your repayment.

Your servicer can answer any questions you have about your payments and you can contact them if you're having trouble making payments - for example, they can help you choose or switch repayment plans if necessary.

You can find your loan servicer information for federal student loans through the National Student Loan Data System or through My Federal Student Aid.

For private student loans, contact your lender about where to make payments. If you're unsure who your private student loan servicer is, check your credit report using Credit Karma or

It's also important to update your contact information with your private or federal loan servicer -- for example, if your college email address expires or you move.

This is because your loan servicer may send you important updates regarding income-based payments and in some cases they could sell or transfer your loans and may notify you via mail or email.

Once you know who your loan servicer is, you can start to make small payments and look at your total balance as well as interest rates.

Knowing your interest rates and exactly what you owe can help you understand how much you could end up paying over time and motivate you to get a head start on payments.

Start making payments now

Because your student loans are likely accruing interest during the grace period, one way to get ahead on your student loans is to start making payments now.

Your full monthly payments aren't due, but you can still pay $25 or $50 here and there to jump-start your progress.

Commit to putting something toward your debt. This can help ensure your balance doesn't grow exponentially because of the interest and can help you build momentum before your payments are even due.

"Since the federal government eliminated most interest subsidies during grace periods for federal student loans, [getting a headstart is] not a bad idea," says student loan lawyer Adam Minsky.

Choose a repayment plan.

Once you know who your loan servicer is, it's time to create a plan of attack to repay your debt.

With federal student loans, you'll automatically be enrolled in the Standard Repayment Plan, which gives you at least 10 years to pay back your loans.

This is the generally the most cost-effective option, as you'll pay the least amount of interest with this plan. However, if you're unemployed or struggling to make ends meet, you may want to consider an income-driven plan with lower monthly payments.

"Evaluate which repayment plan to choose using the Repayment Estimator on," says student loan expert Heather Jarvis.

An income-driven plan can be more sustainable if you're having trouble making payments because of income. If your income prohibits you from paying back your loans, under an income-driven plan your payments could be zero dollars.

Additionally, being on an income-driven plan will ensure your payments are counted toward loan forgiveness.

This may not be the case with deferment or forbearance, two options that allow you to temporarily postpone or reduce your loan payments.

While income-based plans, deferment and forbearance can provide payment relief, they generally mean paying more in interest over your loan's lifetime.

Look at your budget.

During your grace period, you may also want to look at your budget and prepare for your upcoming student loan payments.

Assess your costs to see where you can cut back so you can afford your monthly payments.

To save money and help minimize the chances of missing a payment, Kantrowitz suggests that you "sign up for auto-debit, where your monthly loan payment is automatically transferred from your bank account to the lender."

He says this can help reduce the risk of late payments and your lender may offer you a slight interest rate reduction as incentive.

Just be sure you know when the withdrawal date is to ensure you have enough funds in your bank account or you may overdraw your account -- or your payment may not go through.

Bottom line

If your student loan grace period has just started - or even if you're a few months in - consider taking these proactive steps to help you conquer student loan debt and get ahead.

About the Author: Melanie Lockert is a freelance writer and event planner currently living in Los Angeles. She is the author of Dear Debt: A Story About Breaking Up With Debt. She has been featured on Oprah, Huffington Post, Business Insider, The Globe and Mail and more.

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