We know first hand that wading through the jargon of legal documents can be extremely stressful. Since a complete list of student loan lingo would stretch around the block and back, we’ve opted for practicality and broken down (what may be the most important) 3 terms you must understand to evaluate student loans.
Deferment – Allows you to temporarily delay payments on your student loan.
Not everyone is eligible for deferment. You may be eligible if you are:
- Going back to school
- Unemployed
- Active duty during a war, military operation or national emergency
- Serving in the Peace Corps.
Some loans are not charged interest while being deferred, such as Direct Subsidized Loans. To find out if you quality for deferment, call your loan provider or review your terms and conditions.
Grace Period – The period of time after a payment becomes due, but before you are subject to penalties or late charges.
- Direct Federal student loans offer a compulsory six month grace period.
- Private student loans and PLUS loans do not grant grace periods, meaning you are required to start repayment graduation day, the day you drop out, or when your course loads drop below 50%.
Repayment Plan – The arrangement made to pay back the money you borrowed for your student loan. Keep in mind that there are many types of repayment plans.
- If at any time you want to change your repayment plan, simply call your loan provider because you may be able to change the date and amount of your monthly payment.
- Depending on the type of student loans you have (Stafford loans, Perkins loans, PLUS loans, consolidation loans, institutional loans, private loans and/or state loans), your monthly payment and time frame will differ.
Want to review other confusing terms? Check out our international student loan dictionary to help you navigate the process!
