This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Student Loan Grace Periods Coming To An End

While all the focus has been on student loan interest rates. Congress has failed to renew one of the most important student loan benefits for undergraduates: the six-month grace period following graduation. With the rate of unemployment being historically high, this couldn't have come at a worse time.

Federal student loans have a fixed interest rate of 3.4 percent across the board, regardless of degree or income potential. As of July 1, that interest rate was scheduled to double to 6.8 percent if Congress were to let the low rate expire. Both the President and the Republican candidate wanted to see Congress extend the low rate. The politicians obliged, but not without failing to renew other benefits. For undergraduates, there will be no more six-month grace period at graduation. For graduates, interest will not be deferred while in college.

Keep in mind these changes affect only new loans. If your loan originates on June 30, 2012 or prior, you still have these benefits. Only loans originating July 1, 2012 or later will be subject to the new rules and fewer benefits.

The six-month grace period was an automatic reprieve from needing to worry about finding money for student loans during the time recent graduates are making the transition into real adulthood. This transition involves finding and starting a job, finding a place to live, and possibly managing money for the first time. With the first payment for student loans due right after graduation, pressure is higher .

Parents who are concerned about their kids needing to move home after college rather than living on their own should now be more worried. Monthly student loan repayment may be a higher bill than rent, making it more difficult even for students who do find entry-level jobs in their fields. While mature employees in their fields might joke about recent graduates' expectations for high salaries and immediate responsibilities, these will now be necessary in order to handle student loan payments right away.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs