How the student loan 'grace period' can actually make your debt problem worse via CNBCMakeIt
The student loan"grace period" is a six- to nine-month reprieve from having to pay back your loans that starts from the time you graduate or drop below half-time enrollment. It's often touted as a gift to new grads who have yet to secure employment. But for many borrowers, it can have a costly downside.
"In effect, you end up paying interest on top of interest," says Rebecca Safier, student loan expert at Student Loan Hero. That's a worst-case scenario for borrowers. How small is small? Safier's colleague, Andrew Pentis, a certified student loan counselor, says even a few dollars can make a difference."Submitting as little as what they'd spend on a dinner out, say $15 to $25 [per month], could help to stop their balance from ballooning unnecessarily," he says.
Your grace period is also a good time to take stock of all of your repayment options, says Rubin, if you haven't already. While most servicers will place you in the 10-year standard repayment plan by default, there are other options, particularly if you have federal loans. CNBC Make It breaks down your choices here.
If you have private loans, you will probably need to review your repayment options with your servicer.
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