Student Loans and a Gap Year: How do they work?
COVID-19 has had a huge impact on all students across the world. Education for millions of students globally has completely transformed in 2020.
Article: https://money.com/gap-year-coronavirus-student-loans-grace-period/
COVID-19 has had a huge impact on all students across the world. Education and school institutions have undergone incredible transformation. Those pursuing higher education have been no exception to that. Many have decided that in-class higher education for Zoom University is not worth the same price as in-class sessions and have opted to take a Gap Year. While this may have seemed like a great idea for many, it is worth to take note of the many step’s one should take to properly prepare for a gap year.
Grace Period + Gap Year
It is important for college students who have taken out loans to learn about what the federal/private student loan providers would expect of you, regardless of a gap year. Federal loans often provide a 6-month grace period when a student finishes or leaves college to begin payments. Each student is only allocated one grace period. When that time is up, payments must begin. So if you have federal loans, plan to take a gap year, and expect to return after that gap year, you should expect to prepare some sort of financial plan to tackle those payments.
Income Driven Repayment
Another plan that federal loan students can use is known as the income-driven repayment plan. Payments will be determined by your previous year’s tax return, and can be as low as $0, if you did not work. A few other plans include applying for an unemployment deferment, economic hardship deferment, or forbearance on federal student loans.
We should keep in mind that the information above assumes that you have taken out federal student loans and will be resuming re-enrollment after the grace period is over. If you are a student who has taken out federal loans and plans to re-enroll before the duration of the grace period, then we may have some great news for you. Re-enrollment before the grace period allows the grace period to be fully-restored and no payments will need to be made.
Private Loans
As for private loans, students normally will not have the option to make payments based on income, and deferment options may be limited or not available.
Please remember that all of this information may vary depending on your lender (Federal or Private). It will also be helpful to give your lender a call and discuss some of these options that we have mentioned.
Final Thoughts on Gap Year: Remember to take it slow
Your Gap Year is now coming to a close. You have either traveled the world, gained some meaningful work experience, or took some time off to just relax. However, it is now time to return to school and finish up your degree. This part may or may not be challenging, depending on how well you can transition and adapt back to the classroom. There are many instances where former students do not resume school after taking a gap year. The best advice I may be able to provide to you is to remember your reason for attending college in the first place. You have a goal in mind, and you have already spent a significant amount of time to achieve it. In the long term, you will have finally completed your degree and practiced finishing what you have started.
InsuredTY’s mission is to serve all families from all backgrounds with industry-grade Life Insurance. If you are in the market for Life Insurance email us at support@InsuredTY.com. Thanks for the support!