Student Loans 101

Student Loans Life Cycle

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Life Cycle of Student Loans


Just like every other type of loan, there is a life-cycle for all federal and Private Loans. It is extremely important for you to understand all the phases of the life-cycle of the loans that you take out for your education.

It is extremely important that you keep your servicer or lender informed of any changes to your contact information and your enrollment status.


Federal Student Loan Life-Cycle

You can access a summary of all your Federal Student Loans on the National Student Loan Data System (NSLDS) throughout the entire life-cycle of your loans. NSLDS is a monthly snapshot of all your federal student loans and will help you if you ever need to know who to contact about your loans.

In School Period

The School Period or In-School Period generally refers to the period of time after you have received your loan and you are enrolled in classes.

  • You do not have to make payments on your Perkins loans until you leave college or drop below half-time enrollment.

  • You do not have to make payments on your Direct Subsidized or Unsubsidized loans until you leave college or drop below half-time enrollment.

    IMPORTANT:
    1. Direct Subsidized loans: Interest does not accrue while you remain in the in school period. Any amount you pay during this period will be applied directly to the principal balance of your loan so you can save money.
    2. Direct Unsubsidized loans: Interest will accrue while you remain in the n school period and will be added (capitalized) to the principal balance upon repayment. Any amount you pay during this periodwill reduce the amount added to the balance of your loan.

  • Direct PLUS loans do not have an in-school period and enter repayment once your loan is fully disbursed to the school.

    Graduate students can defer (postpone) payments during periods of full and half-time enrollment. Your loan servicer should automatically place your loan into deferment while you are enrolled at least half-time and for an additional six months after you cease to be enrolled at least half-time. However, it is important to keep your servicer or lender informed of your in-school status and to complete all necessary forms.

    Parents can defer (postpone) payments while the student is in enrolled in school full or half-time. Parents may also defer their payments based on their own school enrollment status. If you are a parent borrower, you should contact your loan servicer to request a deferment while you or your child are enrolled at least half-time and for an additional six months after your child ceases to be enrolled at least half-time.

    IMPORTANT: If your loan is deferred, interest will accrue on the loan during the deferment. You may choose to pay the accrued interest or allow the interest to capitalize when the deferment period ends. Your loan servicer will notify you when your first payment is due.

Grace Period

Grace Period is the period of time after you graduate, leave school or drop below half-time enrollment where you are generally not required to make payments on certain Federal Student Loans.

  • At least half-time enrollment: You do not have to begin repayment until nine months after you graduate, leave school, or drop below half-time status.
    Less than half-time enrollment: You must check with your college to find out how long your grace period will be.

  • Six-Month Grace Period: You will have a six-month grace period before you are required to begin repayment after you graduate, leave school, or drop below half-time enrollment. You will receive information from your servicer regarding the repayment terms of your loans, including the first due date. Be sure to keep an eye out for emails or regular mail so that you don't miss important information.

    IMPORTANT:
    1. Direct Subsidized loans: Interest does not accrue while you are in the grace period. Any amount you pay during this period will be applied directly to the principal balance of your loan so you can save money.
    2. Direct Unsubsidized loans: Interest will accrue while you are in a grace period and will be added (capitalized) to the principal balance upon repayment. Any amount you pay during this period will reduce the amount added to the balance of your loan.

  • Direct PLUS loans do not have an in-school or grace period and enter repayment once your loan is fully disbursed to the school.

    Graduate students can defer (postpone) payments during periods of full and half-time enrollment. Your loan servicer should automatically place your loan into deferment while you are enrolled at least half-time and for an additional six months (grace period) after you cease to be enrolled at least half-time. However, it is important to keep your servicer or lender informed of your in-school status and to complete all necessary forms.

    Parents can defer (postpone) payments while the student is in enrolled in school full or half-time. Parents may also defer their payments based on their own school enrollment status. If you are a parent borrower, you should contact your loan servicer to request a deferment while you or your child are enrolled at least half-time and for an additional six months (grace period) after you or your child ceases to be enrolled at least half-time.

    IMPORTANT: If your loan is deferred, interest will accrue on the loan during the deferment. You may choose to pay the accrued interest or allow the interest to capitalize when the deferment period ends. Your loan servicer will notify you when your first payment is due.

Repayment Period

The Repayment Period is the period of time during which you are required to begin repayment of your student loans. During the repayment period, you'll receive repayment information from your loan servicer, and you'll be notified of your first payment due date. Payments are usually due monthly.

  • Your loan servicer will most likely be the school you were attending when you received the loan, but in some cases, the school will have a separate organization handle the billing and other services for your Perkins Loan. Perkins Loan repayment plan options are not the same as those for Direct Loan Program or FFEL Program loans. Check with your school for more information on Perkins Loan repayment plans and how to make your payments.

  • The U.S. Department of Education (ED) uses several loan servicers to handle the billing and other services on loans for the William D. Ford Federal Direct Loan (Direct Loan) Program and for loans that were made under the Federal Family Education Loan (FFEL) Program that ED later purchased. There are several repayment plan options to best fit your financial situation. Please go to the Federal Repayment Plans under Helpful Links at the bottom of this section for a full description of the the different repayment plan options available. You will have to tell your loan servicer which repayment plan you’d like to choose. If you don't, they will put you under a standard repayment plan based on the total balance of your federal loans.

  • The U.S. Department of Education (ED) uses several loan servicers to handle the billing and other services on loans for the William D. Ford Federal Direct Loan (Direct Loan) Program and for loans that were made under the Federal Family Education Loan (FFEL) Program that ED later purchased. There are several repayment plan options to best fit your financial situation. Please go to the Federal Repayment Plans under Helpful Links at the bottom of this section for a complete description of the different repayment plan options available. You will have to tell your loan servicer which repayment plan you’d like to choose. If you don't, they will put you under a standard repayment plan based on the total balance of your federal loans.


Private Loan Life-Cycle

You will have to keep track of where you obtain your Private Loans because there is not an online location that lists all your Private Loans. You will have to access your loan information on your lender or servicer's website. Because of this, it is extremely important to document this information. If you find you cannot locate the information, you should check with the financial aid office as they should have records of all education loans that were certified by their office. You could also check the Clearinghouse Meteor Network which provides detailed information about outstanding student loans. It is advisable to get a free credit report every year and check the status of all your loans plus it can help you identify who your Private Loan lender is in case you forget.

  • School or In School Period

    Private Loans each have their own terms and conditions but most of them have an in school period that does not require a monthly payment while the student is in school. It is important to understand the terms of the Private Loan you are considering and whether or not payments will be required during the period that you are attending school.

  • Grace Period

    Some Private Loan programs do offer a grace period which is a period of time after you graduate or drop below half time status during which you do not have to make payments. Your student loan servicer should be in communication with you and will send you information telling you when you first payment is due. But, you should also check your loan program documents to fully understand when you will have to begin making payments.

  • Repayment Period

    The Private Loan repayment terms vary from 15 to 25 years, depending on the program. The Repayment Period is the period of time during which you have to make payments on your loan. Depending on your loan program, you might begin the repayment period immediately after the loan is disbursed or you might begin making payments after your In-school or grace periods. Make sure you fully understand your obligations to repay your loan and when the repayment period will begin. You will receive a notification from your student loan servicer notifying you when your first payment is due. Private Loans generally do not have deferments or forbearances. Many Private Loan lenders offer interest-rate reductions for timely payments for borrowers who choose to have their payments deducted directly from their bank account. Payments deducted from a bank account is referred to as ACH.


Helpful Links:


Continue to learn how to achieve a successful repayment experience.

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