There are many types of federal loans. Depending on the type of loan you have, your grace period for repayment will be different. A grace period means the amount of time you have until you have to begin making your loan payments. Three events can trigger the beginning of your grace period, which leads to the beginning of your repayment schedule: dropping out of school, being qualified as less than a half-time student (these enrollment hours are determined by your university), or graduating with your degree. Until one of these events occur, you don't have to make payments. The grace period before you have to begin making payments ranges from three months to nine months. Log into the U.S. Department of Education's National Student Loan Data System website to find information on your loan type, amount, grace period and loan providers, or call the Federal Student Aid Information Center at 1-800-4-FED-AID for this information (see Resources).
The duration you have to repay a federal student loan ranges from 10 to 25 years. The duration depends on the type of loan. The minimum monthly loan payment is $50 per loan transaction. Try paying more than the minimum payment because, as with any payment plan, the more time you take to pay the loan, the more interest you will pay. Some loans have fixed payment plans, but some loans provide you with payment options.
Your college notifies the federal loan program when you have dropped out of school, fallen below the required course hours per semester, or when you have graduated. Shortly after one of these events occur, you will be contacted, usually by mail, by the loan provider. The provider will mail you a payment book, and some providers offer electronic payment options. The repayment information will tell you the date that you must make your first payment and how much the monthly payment will be. If you have multiple loans, you may have more than one loan provider and more than one minimum payment per month. Some loans may be consolidated. Education loans are just like any loan, and defaulting on payments or late payments will affect your credit rating.
Private loans used for education and transacted with banks not participating in federal programs establish their own systems for repayment, time frames for repayment and monthly payments. Interest is almost always higher on a privately funded loan than through the government program. Private loans usually have no deferment plan while you are in school. Your payments begin the month following the loan transaction and continue until you pay back the money.
No matter what type of loan you have, you must pay it back. Paying back a loan requires income to make payments. Unless you are independently wealthy or have someone who is paying your bills, you must get a job, earn money and pay the monthly bill. During times of hardship, you may be able to contact your loan provider for a stipulated, temporary reprieve in payments.