You're finally about to finish your four (or five or six) years of college. You'll have your degree, new opportunities and your dreaded student loan bill. Upon graduation, you'll be required to submit an exit counseling for your student loans through Nelnet, an online student loan servicing company, determining your grace period, repayment plans and estimated monthly payments. Don't be fooled by the term "grace period" and think you'll have years before you have to start paying. You should know about the different repayment plans, grace periods, how and where to make payments, and deferment. Before you get your first notice in the mail, here's some good to know information about federal student loans (private student loan policies vary by lender) to help prepare you for what's to come.
The grace period
For federal Stafford Loans, the most common type of federal student loan, the grace period lasts for six months after you graduate. While you're still in school, you are not expected to make payments toward your loans but you always have the option to do so. You'll receive a notice toward the end of your grace period.
For GradPLUS loans, payments are postponed for six months after you graduate also, called a six-month deferment.
Parent PLUS loan payments are due 60 days after the school receives the last set of funds. Parent PLUS loans don't have a grace or deferment period though you can postpone payments while the student is still in school, but the loan will still accumulate interest. You can request this postponement (called a Parent PLUS Borrower Deferment) directly from Nelnet by calling 888-486-4722.
Repayment plan options
There are five different kinds of repayment plans available for federal student loans.
Standard repayment plan: This payment plan spreads equal payments over 10 years. This is the default repayment plan for graduated until another repayment plan is selected.
Graduated repayment plan: For the graduated repayment plan, the payments start low and gradually increase every two years until the balance is paid off.
Extended repayment plan: This plan is for students with more than $30,000 in outstanding loans. It makes monthly payments more affordable but accumulates more interest and can take up to 25 years to pay off.
Income-sensitive repayment plan: For FFLEP loans only, income-sensitive payments are calculated by your monthly income and can be used for up to five years. After the five years it will automatically defer to either the standard repayment or graduated repayment.
Income-driven repayment plans: For a more affordable monthly payment, there are four income-driven repayment plans available, each with their own requirements for eligibility: The Income-Based (IBR) Repayment Plan, The Income-Contingent Repayment (ICR) Plan, Pay As You Earn (PAYE) Repayment Plan and Revised Pay As You Earn (REPAYE) Repayment Plan are for direct loans only.
Postponing payments
You may postpone payments with either deferment or forbearance.
Deferment is available if you are experiencing financial hardship, going back to school, unemployment or active duty military service. Deferment will not accrue interest for subsidized loans but will for unsubsidized loans.
Forbearance is available if you work an internship, perform certain types of community service or find yourself experiencing financial hardship. All loans accrue interest during forbearance but forbearance resolves any delinquency on your account.
How to make payments
When you submit exit counseling for your loans, you will also need to make a Nelnet account at that time. When you receive your monthly bill after your grace period, you are able to pay on your account online through auto payments from your bank account; mobile app; one-time payments from your online bank account; or by mail or phone. You can also set up alerts to remind you when your monthly payment is due.
Visit www.nelnet.com for more detailed information about student loans and repayment options.
