Exit counseling/grace period

When you finish school or drop below half-time enrollment, your federal student loans will go into what is called a grace period. That’s a six-month period before you have to start paying back your loans. Private loans may or may not have a grace period. That’s one thing to keep in mind if you’re thinking about a private loan.

Borrowers of federal student loans are required to go through exit counseling before they begin repaying their loans. During exit counseling, you’ll learn about your repayment options, about deferments and forbearances, and about what might happen if you don’t repay your loans.

Once you borrow a federal student loan, you have certain rights and responsibilities of which you need to be aware.

As a federal borrower you have the right to:

  • Receive a copy of your signed Master Promissory Note (MPN)
  • Receive a disclosure statement
  • Receive a six-month grace period
  • Prepay all or part of your loan without penalty
  • Receive deferments and forbearances, if eligible
  • Receive written notice if your loan is sold
  • Receive proof of discharge after repaying your loan in full

As a federal borrower you have the responsibility to:

  • Repay your loan plus interest
  • Make on-time monthly payments
  • Read correspondence from your lender or servicer
  • Notify your lender or servicer within 10 days if you change your school or enrollment status, name, address or phone number
  • Ask your lender or servicer for help

When you graduate, drop below half-time status or withdraw from your academic program, you will be considered in repayment and will receive your grace period for your federal loans. Be aware that each loan only has one grace period. If you have used the full grace period, it will not be granted again should you return to school at a later date.


Federal student loans are considered defaulted if you haven’t made any payments in 270 days. When that happens, you can expect any or all of the following to occur:

  • The full balance of the loan becomes due immediately.
  • A collection fee is added to the account.
  • The default is reported to consumer reporting agencies.
  • Requests for future federal student aid may be denied.
  • You lose forbearance and deferment eligibility.
  • Your income tax refunds or other monies owed to you may be taken.
  • Your wages may be garnished.
  • A lien may be placed on your property and financial accounts.
  • Loans may be reassigned for further collection activity.

Protecting your credit score

 Student loans are reported to national consumer reporting agencies every month. To maintain a healthy credit score:

  • Make loan payments on time
  • Maintain accurate payment records
  • Keep important documents, such as promissory notes and disclosure statements
  • Respond immediately to any errors on billing statements or disclosures
  • Keep your contact information up to date