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One of the major benefits of student loans is the grace period allowed before repayment must begin. This period of time will often carry you through graduation and allow you to establish yourself in a new job before you start making monthly payments. Using your student loan grace period wisely can help ease your transition into post-college life as you learn how to manage your finances.

Know the Details About Your Student Loan

Different student loan types offer different grace periods, so it's important to understand how long you have until you need to start making payments. You should also review the specific terms of your loan, including how interest is accrued during the grace period. The Federal Student Aid Office recommends setting up online access with your loan servicer prior to graduation in order to find out more information about grace periods and repayment plans.

You should also be aware of any additional restrictions placed on your student loan grace period. Typically, only one grace period is permitted per loan; once it's used, it cannot be used again. However, if you enter active military duty, you may receive an extension. If you consolidate your student loans, your grace period may also be affected. If you need additional time to repay due to unemployment, you can look into different payment plans outside of the grace period. You may also be able to defer payment of federal student loans if you meet certain eligibility requirements.

Decide When to Repay Loans

The intention of the student loan grace period is to allow you to get established in your post-college life. Chances are you'll be starting a new job, looking for a place to live, and making other large purchases like a professional wardrobe or a car. During this time, you'll also need to think about how to manage your new income stream and expenses. Preparing a budget and tracking expenses closely can help you analyze how you're using your money. By the time your grace period is over, you should have some idea of how you'll fit the student loan payment into your monthly spending and how much money you'll need to set aside from each paycheck to cover this obligation.

Depending on your ability to repay — and your personal preferences about carrying debt — you may decide to step up repayments and pay your loans off faster. Although the grace period is offered, it's by no means mandatory.

Learn About Managing Finances

Your first job out of college will provide a steady stream of income. Once you begin receiving a paycheck, take some time to learn how much of your net income you need to spend to cover monthly bills and how much you can save on a regular basis. To understand how best to manage your money and establish good saving habits early in your career, gather as much information as possible by tracking your income and expenses over the first few months.

Your student loan should be considered in conjunction with the other monthly household expenses such as utility bills, a car payment, and insurance. If your bank grants access to your accounts through an app or online, you can easily view how much you're spending and saving. Setting up an automatic savings plan is another great way to instill financial discipline when you first start working. If you're having trouble making sense of your new financial situation, you may want to check out the online tools designed to help you understand your current finances and help you set savings goals for future purchases.

A student loan grace period can help you through the pivotal time after college graduation when you first enter the working world. Before you start making payments on your student loans, it's helpful to educate yourself on financial wellness and saving money, and seek out assistance when needed.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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