If you graduated in Spring 2013, congratulations! We hope you’ve already snagged a great new job in your field or major and are set up and ready to launch your new life. But even if you’re still struggling to find the job you want, are tending bar, or blending Frappuccinos, you’ve got to deal with your student loans. For all of you, your six month grace period is ticking down and very soon your loan servicers will be itching to get the first of many installments on your education loans.
Your grace period after graduating (or leaving school or dropping down to less than half time) is usually six months. This is the norm for most loans unless you apply for a consolidation immediately upon graduation. In this case, your first payment will be due 60 days from the date of official consolidation.
Tip #1 For Those Who Are Employed and Can Afford Payments
If you’ve got yourself a good paying job and can afford your student loan payments, we recommend that you bypass the grace period completely and go ahead and start making payments. Why? First, the sooner you start making payments, the sooner you’ll be done. Second, if you start paying sooner, you’ll avoid interest accruing during that six month period. Third, the sooner you start paying, the easier it will be to accommodate your payment in your monthly budget.
Tip #2 For Those Who Are Underemployed and Can’t Afford Payments
If you haven’t got a job yet or had to take a low paying job and know that your payments are going to be unmanageable, go ahead and apply for Pay As You Earn or Income Based Repayment. PAYE has lower payments and a shorter grace period, so try for that one first. If you don’t qualify, then apply for IBR. Start this process a month or two into your grace period so that you can (hopefully) be approved before your six months wind down so that your loans don’t go into default because you can’t pay.
Tip #3 For Those Employed in Public Service Who Can/Can’t Afford Payments
If you’re employed in a public service occupation that qualifies you for Public Service Loan Forgiveness and if (and only if) you plan to stay in this field, you may want to apply for PAYE or IBR to get the lowest possible payments so that you can get the greatest impact for your tax-free PSLF. Apply a couple of months into your grace period so you can be sure it kicks in before your payments start. Be sure to keep up with your supporting documentation and qualifying payments.
Tip #4 For Those on Military Active Duty Who Can/Can’t Afford Payments
If you are on active duty for the military and owe student loans, you have several different options. First, you may be able to get your grace period extended for up to three years. You’ll need to talk to your lender about this. Second, early into your grace period, you may want to see if you qualify for PAYE or IBR. If the payments are very low and you plan on staying in the military (or continuing on into public service after you leave the military) for 10 years, you may want to start making these low loan payments so that you are accumulating the required 120 payments for PSLF rather than riding out a grace period.
Tip #5 For All Those With Student Loans
If you have student loans in any amount – no matter whether your payments are affordable or unbearable on your budget – sign up for Tuition.io’s free student loan management and optimization tool. This will get you off to the best start and help you deal with your debt with tracking tools, repayment strategies, reminders and more. Also check out our new student loan help center for more information on how to apply for PAYE or IBR and read our blog for news, tips and strategies on student loan topics!