Private student loan programs are set up so that the loans they offer will accrue interest fees on the total loan amount while you are still enrolled in school and completing your education. You will also accrue interest during your grace period and periods of deferment and forbearance.
A grace period is a period after you complete your education but before you are required to make payments on your loan. Typically, a grace period for student loans will be six months. In some cases, you may be able to get an extended grace period.
Deferment is another term to know when it comes to repayment plans for student loans. During a deferment period you will not be required to pay any of the interest that has accrued on your loan yet. The standard deferment period is about three years for student loans.
Forbearance can be requested if you need to suspend or lower the amount of each monthly payment you are required to make. Typically, this period will last for one year or less for a student loan. During this forbearance period, your loan may continue to accrue interest. This can lead to you paying more for your loan over time.
To secure a forbearance, you will likely need to request and complete a form from your loan servicer. Forbearance is intended to be temporary relief during an emergency or during times of financial struggle.
Deferment and forbearance can provide short-term financial relief when it comes to student loan payment plans, but you may end up paying more overall if you choose these options. As interest is accrued over time, you will end up owing more than you did when you originally created the loan.
During the grace period, deferment, or forbearance of a student loan, you will continue to be charged interest on your loan that you will be required to pay back. These student loan repayment options can help you manage your loans during specified periods of time, but they may not be the best choice for everyone.
If you start to make payments towards your student loans while you are still enrolled in school or during your grace period, you can make an impact on the total amount that you owe and lower the total interest you will pay during the life of the loan. By making payments early, you can work to avoid needing a deferment or a forbearance.
By Admin –