I just recently received my bachelor's degree. I have government loans and a personal loan from Sallie Mae. I have to start paying these back in mid June. I have a job currently, and I was originally just going to work and pay off my loans. But now I want to go back and get my Masters. What will happen to my loans during this time? I assume interest will keep accumulating, but will I be required to pay on them?
Payments for federal subsidized and unsubsidized loans are due at the latest six months following graduation. Although, there are some exceptions.
Deferment Most people who qualify for a deferment do so under one of these two conditions:
- At least half-time enrollment in course work at an accredited college, university, or career development program.
- Being unemployed or unable to find work.
If you are approved for the deferment your payments on your loans and interest will be postponed until you begin making payments. The government will pay the interest on your subsidized loans while deferred; however, the interest on your unsubsidized loans will continue to accumulate. If you wish you can make payments on the interest to reduce your tax burden at the end of the year as it is deductible and that will also reduce the overall payment when you end classes. That option would have to be based on your specific financial situation.
Some private school loans offer deferment also. The terms are up to the loan servicer when it comes to conditions of deferment and how long the deferment could last. Sallie Mae does have postponement options, but I am not certain of the details you can register and login to your loan account herethen review details carefully.
If your classes begin before your payments are scheduled to be due then the in-school deferment will be all that you need to prevent you from defaulting. If not you may need to apply for forbearance.
Forbearance Forbearance works the same as deferment, but is for people that do not qualify for deferment. You will accrue interest on both subsidized and unsubsidized, but you do not have to make payments. You would only want to have the forbearance untill your classes began, apply for the deferment. The typical conditions are:
- Financial hardship
Because you are just coming out of school if you call and ask for forbearance you will most likely be granted an automatic six months. More information can be found here
You can also check the status and balances of your federal student loans here