Is Your Federal Student Loan Grace Period Ending This Fall? Here are Four Things to Know

Congratulations on graduating law school! It’s now time to prepare to pay back your student loans.

After you graduate, your federal student loan goes into repayment. If you hold a Direct Subsidized, Direct Unsubsidized, or Federal Family Education Loan, the standard grace period is six months. Other loan types may have differing grace periods (the promissory note you signed for your loan tells you the length of your grace period).

Before your grace period ends:

• Update your contact information on studentaid.gov and your loan servicer. If you are not sure which servicer your loans were transferred to, log into your Federal Student Aid dashboard and scroll down to the “My Loan Servicers” section. If you have trouble logging in, call 1-800-4-FED-AID (1-800-433-3243) for loan servicer information.
• Once you know who your loan servicer is, enroll in autopay. This can save you 0.25% on your interest rate.
• Don’t ignore messages you receive from your loan servicer. Missed payments do not count towards PSLF, unless you repay the amount due within 15 days of the due date.

When your loan enters repayment, your servicer will automatically place you on the Standard Repayment Plan unless you choose an Income-Driven Repayment plan (IDR)—the better option for you if you are planning to work in public interest law.

Generally, under the standard repayment plan, payments are fixed over 10 years. While you might usually pay less overtime than under other plans, this is not a good option if you plan to earn Public Service Loan Forgiveness (PSLF) while working in public interest law. In this case, it makes sense for you to enroll in an income-driven repayment plan (IDR). An IDR plan is based on your income, and your monthly payment amount will depend on what repayment plan you choose.

The Department of Education announced a new income-driven repayment plan called ‘SAVE.’ To date, 4 million borrowers have enrolled in this new plan that will replace REPAYE. The Department of Education believes, in total, 20 million more borrowers are eligible for SAVE, and would see significant relief by enrolling in it—you might be one of those borrowers. Read more about SAVE here.

Prepayments and PSLF:

If you ultimately want to earn PSLF, prepayments on your loan while you are in school or during your grace period will not count towards the 120 payments needed to earn forgiveness, so keep that in mind. If you have privately held debt, this might be worth prioritizing paying down during your grace period.

If you’re past your grace period, in repayment, and have accepted a job in public interest law, consider this:

Once you start your working in public service and are in repayment, get into the habit of certifying your employment for PSLF. It’s not required, but best practice, to fill out and submit the PSLF form annually or whenever you change employers. This can save you a lot of stress in the future by getting to this practice. We recommend using FSA’s PSLF Help Tool to do this.

At Equal Justice Works, we are committed to ensuring that no law student or lawyer is deterred from a public interest legal career by the burden of student debt. Through our work, we support aspiring and current public interest lawyers to understand the often-complex student debt landscape. We know minimizing the burden of student debt is crucial in supporting public interest legal careers, which in turn, are crucial to the benefit of our communities and justice system.