graduate student loans

Repaying Student Loans from Graduate School

Tue, 25 Aug 2009 17:31:00 +0000

If you're starting to worry about repaying your student loans or what will happen to your loans if you return to graduate school, a brief overview will help calm your fears.

How long do I have to repay my student loans?

Stafford and PLUS Loans generally allow borrowers up to ten years to repay the loan. Deferments and/or forbearances will not count toward the ten-year term. You may, however, extend the ten-year term if you qualify for the Extended Repayment Plan.

Another way to stretch your repayment term and reduce your monthly loan payments by as much as 51% is to consolidate your student loans. By consolidating, you could extend the repayment period up to 30 years, depending on the initial balance of the loan.

How is student loan repayment affected if I go back to school after entering repayment?

If you go back to an approved school and are enrolled half-time or more or are enrolled in a graduate fellowship program, you can put your student loans into a deferment status. There are no principal payments due while you are in deferment and the government will pay the interest on your subsidized loan during periods of deferment.

What happens if I don't repay my student loans?

If you do not repay your loans according to the terms disclosed on your promissory note, you may eventually be in default on them. Some consequences may include:

* An adverse affect to your credit rating that may limit your ability to borrow for a car, home, or credit card.
* A requirement to pay the entire amount of the loans, including interest, immediately.
* A withholding of your wages to pay your debt after the loans are assigned by the guaranty agency or the federal Department of Education.
* Inability to get additional federal or state money for graduate school, including student loans.
* Withholding of your federal and state tax refunds.

When do I have to begin repaying student loans?

The day you finish your graduate school program, or drop below half-time status, your Stafford student loans go into a "grace period." The grace period is a six month term where you are not yet required to start making payments on your loans. Once that grace period expires, payments will begin. You only get one grace period on each loan. If you stop going to school, then start again (thus putting your loans in deferment), when you leave school again repayment will begin immediately without a grace period. Any new student loans, however, will be eligible for a grace period.

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