When students graduate from college, many have what’s called a grace period for their student loans. This grace period allows new graduates to go out and find a job before starting loan repayments. However, are there grace periods when it comes to student loan refinance? Unfortunately, no, there are no student loan refinance grade periods. When you refinance student loans, the payments start immediately after the funds are disbursed. The first payment is due within 30 days from the date of receiving the funds.

Two Important Things To Remember About Student Loan Refinance Payments

First, if you don’t make the first payment within the 30-day deadline, the lender will consider it as a missed payment. They will then charge you a late-fee penalty as well as interest on the late payment.

Keep in mind, the refinancing process takes time. While the process is ongoing, you must continue to make payments on the original loan. Those payments stop only after the refinancing process is complete and you receive the fund. If you stop payments prematurely, they will be considered as missed payments. You will incur a fine and interest as with any other late payments.

Is Refinancing Right For You?

Refinancing offers several benefits from simplifying loan payments to getting more suitable terms on your loan. However, this may not be the right solution for everyone.

Refinancing is right for you if:

You qualify for a lower interest rate than what you’re currently paying. This would generally happen if you’ve worked towards increasing your credit score and reducing your credit utilization ratio.

You’re earning a high income and have cash left over every month after paying off your utilities and rent. Under these circumstances, you can refinance to increase your monthly payments. The higher monthly payments will instantly reduce your loan term so you’ll clear your debt faster. The shorter loan term also means lesser interest accrual, which can add to your savings.

You can’t afford the monthly payments. Under these circumstance, you can refinance to lower your monthly payments and make them more affordable. This will extend your loan term and cost you more by way of interest. However, it will minimize the risk of delinquency and default, which have far more serious consequences. You can always refinance again when your finances improve.

You want to release your cosigner. Having a cosigner is a huge responsibility for you and the cosigner. If you have any student loans with a cosigner, in all fairness you should release your cosigner as early as possible. Of course you can’t do this whenever you want. The lender will only sanction a cosigner release if you qualify for refinancing on your own credentials.

Market interest rates are down. Lenders set interest rates according to prevailing market conditions. When market rates are down, lending rates go down too. When you refinance at this time you’ll benefit from the lower rates.

Refinancing may not be right for you if:

You have federal student loans and don’t have a steady job yet. Federal student loans offer several protections that could be life-saving when times are bad. Income-based repayment plans ensure that the payments are always affordable, no matter how low your income. Deferment and forbearance can help when you just don’t have the funds for the payments. It’s best not to refinance federal student loans until such time that your finances improve substantially.

You’re pursuing student loan forgiveness. If you’re working in public service or teaching in an underserved area, you may qualify for loan forgiveness. This is only applicable to federal student loans. If you refinance your federal loans, they’ll become private loans and be ineligible for forgiveness.

If you do decide to go ahead and refinance your student loans, it’s important to make a note of the payment dates. Confused as to when the first payment needs to go out? Don’t hesitate to ask the lender to clarify. Once you’ve confirmed the due date, make sure that the payment goes out on time. Don’t presume there is a grace period. There’s no student loan refinance grace periods.