The moment you leave school, your student loans will enter repayment in case they already haven’t. However, you will be glad to know that there is a ‘waiting period’ before you are asked to repay the principal you borrowed along with the interest. This sweet period that gives you freedom from those recurring deductions is called the Grace Period. Generally, the grace period lasts for six months. You’ll be more than happy to know that there are various ways in which you can extend this period. Let’s explore these ways and get started with this blog on – Student Loan Grace Period Extension Ways.
What Is The Student Loan Grace Period? | Understanding Student Loan Grace Period
First, let’s understand what the student loan grace period actually is and then we will have a look at the student loan grace period extension ways.
The student loan grace period is a stretch of time after you’ve graduated in which you’re not required to make payments. After this grace period ends, you’ll have to start making monthly loan payments until you clear the entire loan amount. This period is provided so that you have time to become financially settled after graduating, leaving school or dropping below full-time status.
Do note that this grace period isn’t a time to live in blissful ignorance but rather an opportunity to get your personal finances in order before those recurring monthly payments start carving out a chunk of your monthly budget.
In order to know more about the student loan grace period, different types and their duration plus the do’s and don’ts, make sure you also read: What Is The Student Loan Grace Period?
How To Extend A Student Loan Grace Period? | Student Loan Grace Period Extension Ways
There may arise many instances in which, even after the grace period ends, you may be unable to begin payments. This means you’re probably wondering: Can I extend my grace period?
The answer is yes. Following are some student loan grace period extension ways.
Talking about federal student loans, there are only two ways in which the student loan grace period can be extended. These are:
- Returning to school before the end of your loan’s grace period—If you re-enrol at a school at least half-time before your student loan grace period ends, you’ll receive its entire length in the future.
- Active military duty—If you are summoned to active military duty for a duration of more than 30 days before the end of your grace period then not only are you able to defer payments while on active duty, but you will also receive the entire six-month grace period when you return from active duty.
Coming to private education loans, lenders generally offer a nine-month student loan grace period. In order to get a grace period extension, enquire with your lender or loan servicer for the available options. For example, it’s possible your loans could be eligible for a deferment or forbearance.
Don’t forget to read: Lawsuits for Private Student Loans
Important Note: Even if you grab a student loan grace period extension, you might want to use it very carefully. It is best recommended that you do not use it at all if there isn’t a dire need. No option makes loans disappear. Also, because interest continues to accrue on most loans during deferment, it adds to the balance you’ll ultimately repay someday.
Other Options To Defer Payments
As seen above, there are just a handful of student loan grace period extension ways on federal student loans. However, there are alternative options for postponing payments if you are unable to pay. Those include deferment and forbearance.
These two options are very similar to each other. They both allow you to halt paying your student loans during financial hardship, but there are a few key differences. It is more difficult to qualify for deferment but it can last longer than forbearance. In the case of subsidized loans, they will stop accruing interest during a deferment, but not during a forbearance.
Deferment may be granted in any of the following circumstances:
- Cancer treatment: Deferment can occur while you undergo treatment, and for six months afterward.
- Economic hardship: If you have a low enough income, you may qualify for economic hardship deferment.
- Graduate fellowship: If you are enrolled in a graduate fellowship program, you can defer loan payments.
- Unemployment: Loans can be deferred up to three years if you are receiving unemployment benefits and actively searching for work.
- Parent PLUS borrower: If you are a parent borrower, you can defer payment while your student is enrolled in school at least half time and for six months afterward.
- Rehabilitation training: You can defer loans while enrolled in a vocational, drug abuse, mental health, or alcohol abuse rehabilitation program.
To apply for deferment, contact your student loan servicer to find the correct paperwork needed.
There are two types of forbearance: general and mandatory. General forbearance is also known as discretionary forbearance because it is up to the discretion of the loan servicer whether to grant it or not. You may contact your servicer to request a general forbearance for financial difficulties, medical expenses, change in employment, or other reasons, depending upon the servicer’s discretion.
Mandatory forbearance is one wherein your loan servicer is obliged to grant an extension if you meet certain criteria. The possible criteria include:
- Your student loan payments are 20% or more of your total monthly gross income
- You are participating in the teacher loan forgiveness program
- Participation in a medical or dental internship or residency
- You qualify for the Department of Defense Student Loan Repayment Program
- Serving in AmeriCorps
- National guard duty
You can also consider Student Loan Forgiveness Programmes to see if you can eliminate your student loan altogether.
That’s it for this blog. Hope you benefit from these student loan grace period extension ways.
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Thank you for reading this blog on ‘What Is The Student Loan Grace Period?’. If you enjoyed reading this blog and would like to continue reading more about student loans then do check out our following blogs.