A grace period is a specified period of time before a borrower enters repayment. It begins the day after a borrower's last day of instruction, when a borrower withdraws or when a borrower drops to less than half-time enrollment status. The grace period for Federal Stafford loans is six months and nine months for Federal Perkins loans. During the grace period, no payments are due and interest on the loan (if it is subsidized) continues to be paid by the federal government. However, interest will continue to accrue on unsubsidized loans. The Federal Graduate PLUS loan does not have a grace period. Once the grace period is used up, a borrower will not be able to acquire another one with the exception of the Perkins loan as indicated in the chart below.
If a borrower took any time off during school such as a leave of absence, he or she may have used up part or all of the grace period. The grace period upon graduation may be shortened or completely exhausted. A borrower who has used up the entire grace period during a break period from school will go into immediate repayment upon graduation.
Institutional loans may have grace periods. If you borrowed an institutional loan such as the CCOM Loan at the Downers Grove campus or the Dr. Lucas Medical Loan at the Glendale campus, click hereto go to our institutional loan page for further information.
|Grace Periods for Federal Loans|
|6-months post deferment*|
|PCL||12-months post graduation|
|Grad PLUS loans||none**|
|FFEL and DL Consolidation||none|
|DL Consolidation (disbursed prior to July 1, 2006)||6-months|
*An additional 6-month grace period is available after periods of deferment on a Perkins loan
**See the section below for the Grad PLUS Post-Enrollment Deferment for loans disbursed after July 1, 2008
Deferment is a period of time when a borrower can postpone loan payments. A loan servicer will grant a deferment only after certain criteria are met. During a deferment, interest will not accrue on any subsidized loans. Borrowers that have loans with more than one servicer will have to apply for a deferment with each servicer and for each loan type (i.e., for Stafford and Grad PLUS loans). Deferments are generally granted for twelve months and have to be requested annually. There are six major types of deferments.
- At least half-time enrollment in school
- Enrollment in an eligible graduate fellowship program
- Enrollment in an approved rehabilitation training program
- Seeking to find (and unable to find) full-time employment (granted up to three years)
- Experiencing economic hardship (granted up to three years)
- Serving on active duty in the military
GRAD PLUS POST-ENROLLMENT DEFERMENT
Grad PLUS loans disbursed on or after July 1, 2008, are eligible for a special six-month deferment after a borrower ceases to be enrolled. This post-enrollment deferment can be automatically granted after the in-school deferment on eligible Grad PLUS loans. A borrower should call the loan servicer to verify that this deferment has been granted.
PERKINS LOAN DEFERMENTS
For deferment information on the Perkins loan click here.
INSTITUTIONAL LOAN DEFERMENTS
If you have questions regarding deferments on institutional loans click here.
Most private student deferments are based upon individual lender policies. Check with your lender.
Forbearance is a temporary allowance where a borrower makes no payments or makes lower payments to avoid delinquency and default. Borrowers should only use a forbearance if they are ineligible for a deferment or have exhausted their deferment eligibility. During a forbearance, interest accrues and capitalizes on all loans (subsidized and unsubsidized). Capitalization of the interest can occur at the end of a forbearance period, but it may also happen quarterly depending on the lender's policies. The duration of forbearance can range from six to twelve months.
There are two categories of forbearances; discretionary and mandatory. With a discretionary forbearance, the borrower must be experiencing financial hardship. The borrower must receive authorization from the lender or the loan servicer. For a mandatory forbearance, the lender must grant forbearance to certain borrowers. Who qualifies for mandatory forbearances?
- Borrowers in medical internship/residency
- Borrowers whose monthly federal education loan payments equal 20% of their monthly income
- Borrowers who are participating in AmeriCorps
- Borrowers who are a part of a military mobilization
Borrowers need to contact their lender(s) or servicer(s) for more information on mandatory forbearances.
The cancellation process consists of two steps: postponement and cancellation. During the postponement period, regular principal payments are deferred while the borrower is performing a service that will subsequently qualify him/her for cancellation of all or a portion of the loan. Acceptance requires certification of employment or service by the employer or agency. During the cancellation period, a borrower must apply for cancellation benefits at the end of a full year of eligible employment or service. Prior postponement is not required to be eligible for cancellation of benefits. Borrower must check with their school, lender or servicer to determine which student loans are eligible for cancellation.