Short Grace Period Ending Soon, Enrollment Info Taking Long Time to Update. Any Advice?

Paying for College
1

Warning: this post is long

I dropped all my classes for the Fall 2018 semester in late August. This was before the first day of classes of the Fall 2018 semester.

A little over a week ago, I decided to notify both my Federal Direct loan servicer and my Federal Perkins loan servicer of my enrollment status change because the Direct Exit Loan Counseling and information on the website for my Direct Loan servicer suggested that I should contact my loan servicers to report a change of enrollment status. Also, the NSLDS and both of my online loan servicer accounts at the time still said I was enrolled full time.

So I called my Federal Direct Loan servicer. The customer service representative asked for the date I dropped my classes and said she would put in a request to change my enrollment status. I also explained to her that I dropped my classes before the first day of classes and asked her whether the last day I attended classes (which was in May) or the date I dropped my classes for the Fall 2018 semester (which was in August) would be used to determine the beginning of the grace period. She told me the date I dropped my classes would be used.

I also contacted my Federal Perkins Loan servicer, and they said they will update my enrollment status once my enrollment information is updated on the NSLDS.

On Monday, my enrollment status on the NSLDS finally got updated after almost two months of waiting, and my enrollment status on my Federal Perkins loan servicer account got updated on the same day. However, the payment due date for my Perkins Loans is based on a grace period that started in May instead of August. Apparently, this is because the date that I left school that my college reported to the NSLDS was the day after my last day of attending classes instead of the date I dropped my classes.

So I called my Direct Loan servicer again. The customer representative confirmed that though my grace period is supposed to start on the date I dropped my classes, my grace period will now start in May since that is the date that is reported by my school to the NSLDS and that I would have to contact the school if I wanted to fix the mistake made on the NSLDS. And the next thing she said shocked me: She said that the enrollment status on my account will be updated in about a month. If I had a normal 6 month grace period, it wouldn’t be that big of a deal for my enrollment information on my direct loan servicer account to take almost 3 months since I dropped out to get updated, but because my grace period started almost 3.5 months before I even dropped out of college, I really only have a 2.5 month grace period, and my direct loans’ grace period will likely end before my direct loan servicer can even get my enrollment information on my account updated.

And now after our conversation, I’m worried that since the first customer representative from my Direct Loan servicer put in a request to change my enrollment status with the date I dropped my classes, they’ll set my grace period start date to the date I dropped my classes and then later realize that the NSLDS date is different and change my grace period start date to the date on the NSLDS. If this happens, I’m worried that they will label me as a delinquent borrower and damage my credit for not making payments on previous months that were part of the grace period that started in August but not part of the grace period that started in May.

So, in summary, my problem is that I currently have a 2.5 month grace period instead of a 6 month grace period that is going to end in about 3 weeks, and my direct loan servicer and the NSLDS seem to need the full 6 month grace period even more than I do since, though I am stressed about having only a few more weeks to prepare for loan repayment, it takes an incredibly long time for just my enrollment information to be updated (and I’m not even sure if there are other things that the direct loan servicer needs to do besides update my enrollment information that could take a long time as well before I must begin paying my loans) and my enrollment information will likely not even be updated before my grace period ends. And I’m also losing trust in my direct loan servicer because of this (especially since my perkins loan servicer in comparison updated my enrollment info the same day the NSLDS was updated) and worry that this issue or any mistakes or delays made in the future (for ex. How long does it take for them to process a payment if it takes this long to update my enrollment info?) could cause me to miss and/or be late on payments, damage to my credit, me being ineligible for deferment and financial aid if I return to college some day, and many other negative consequences.

One way I could resolve this problem is by contacting my school and asking them if they could change the date on the NSLDS to the actual date I dropped my classes. However, I am not sure if I should do this for two main reasons. The first reason is that I don’t know how long it will take for changes to be made on the NSLDS since it took almost two months to get my enrollment information updated on NSLDS, and if it takes months for changes to be made on the NSLDS it may not even worth it to ask the school to change the date since my grace period is ending soon and it might just cause more drama (if I request changes to my enrollment information on NSLDS, I need them done like within a week, not two months). The second reason is that I don’t even know if the date my school reported was a mistake and wonder if I should even bother. The date on the NSLDS wasn’t a random date, it was exactly the day after the Spring 2018 semester ended, which makes me wonder if the school is supposed to report the day after the last day of attendance. Also, I read a thread on another forum that claimed that a person who drops out of school in August would have a grace period that starts after the last day the person attended classes instead of the date the person dropped out. But my direct loan servicer said that it was the date I dropped my classes, and the loan servicers are supposed to be very knowledgeable about student loans, right? I’m not even sure what to believe. Maybe they both are right, maybe whether my last day of attendance or the date I dropped my classes is used is not universal and depends on the school which could explain why my school reported the day after my last day of attending classes. I don’t know. I even tried checking the MPN, but the MPN’s explanation of when grace period starts is vague and the way I interpret the MPN the grace period start date could be May or August.

Any advice will be appreciated.

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You do not get to change the beginning of the grace period to the date you dropped the courses. You last attended school in May, so the grace period begins then. You can ask them where to send the payments and just start sending them, and then follow up to make sure the payments and due dates match up.

3

According to studentaid.ed.gov, you have 6 months after you “leave school” to start repaying your loans. If you last attended classes in May your 6 month grace period ends sometime in November. It seems short to you because you only decided to drop your fall courses a couple of months ago, but those aren’t on your record and you don’t owe for them. That makes them like they never happened (because they didn’t).

4

Unless something has changed…

Grace period for direct loans is six months.

Grace period for Perkins is nine months.

Both are from the last day you were a student, and for you that was May.

5

Grace period is six months after you drop below half time, leave school or complete your program of study for Direct loans. If you dropped below half time before May, the date for the grace period will begin as of the date you dropped below half time. If you were enrolled at least half time through the end of your spring term, May will be your grace period start date because you didn’t return for fall. Perkins loans have a nine month grace period. Your grace period is not tied to when you dropped fall classes or when you found out that you were in the grace period.

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I hear what you all are saying. But to be honest, I still can’t go over the fact that my direct loan servicer told me a completely different answer. I explained to the first customer service representative well that I dropped out before the first day of classes, and she confidently told me it was the date I dropped my classes instead of my last day of attending classes and used the date I dropped my classes for the enrollment status change request. And the second customer representative, instead of telling me the first customer represenative was wrong when I explained my situation and the first customer service representative’s response, told me I need to contact the school to fix the mistake on the NSLDS. So that’s 2 out of 2 customer service representatives of my direct loan servicer who believe that it’s the date I dropped my classes.

If you all are right and my direct loan servicer is wrong, then I’m even more angry at my direct loan servicer because even the company who’s supposed to be servicing my loans doesn’t know when my grace period is supposed to start. And yeah, my situation is a bit different, but it’s something I feel they still should know and I really find it hard to believe that I’m the only person who ever dropped out of college during the summer instead of during the school year.

@twoinanddone I wouldn’t request a change on the NSLDS just to change my grace period start date because I think using the date I dropped my classes is more fair. I know no one’s going to change my grace period start date for special circumstances. The only reason why I’m considering it is because that is actually what my direct loan servicer suggested since according to them my grace period start date is supposed to be the date I dropped my classes and my school made an error by reporting the date that they reported. If I would have never called my direct loan servicer to report a change in my enrollment status and ask them about my grace period, I would have just assumed that the date on the NSLDS was correct and not even bother thinking to ask the school to change it because even though I really want it to start in August if it’s supposed to be in May I can’t change that.

7

I’d start making payments with the assumption the date will start with May.

8

You are dealing with very low level employees who do not know the answer to every question. They don’t set the rules, and they can’t change the rules. They make mistakes too. If you had called and the person answering the phone said “You don’t owe anything” that wouldn’t be true either. The loan documents control and those say you must begin repayment 6 months after you leave school.

Everyone would be able to get an extra 3-4 months grace period by signing up for the fall semester and then dropping those classes if the ‘drop’ date was used. The loan documents say that the grace period starts when you leave school, and isn’t really concerned with what you think is fair. There are students who leave school early because of illness or job loss or death of a parent, and it might be ‘more fair’ to let them have a longer grace period too, but that’s not how it works.

Your school thought you were returning for the fall because you signed up for the fall. They didn’t report that you were no longer in school until the fall because that’s when they knew you weren’t returning. It all takes some time to straighten out. If you don’t want to be late, ask them how to make payments starting in Nov., even if everything isn’t set in stone (the payment date, the exact amount) then follow up to make sure you are paying the correct amount.

9

OP- you can expend energy being angry, or you can take that energy and figure out a plan- now, today, on how you are going to repay your loans.

You are wasting time. What’s the plan for starting loan payments?

10

Go to the studentaid.ed.gov website and read the rules yourself. Taking someone else’s word for something when it’s likely to cause you interest and late fees isn’t the best way to handle your money. I’m surprised that you don’t know when your loans come due. I thought the counseling students are required to do in order to take a loan and the exit counseling both explain the grace period.

I don’t really understand why you think it’s more fair to start your grace period from August. I think the rules are pretty clear. Return to college within 6 months or start repaying your loan. If it worked the way you wanted then people could sign up for classes every 5 months and drop a couple of weeks later. Their loan would never come due because there would never reach the 6 month mark.

11

The OP thought she was returning to college so didn’t do the exit interview right when she left. She was given the wrong info, so it’s understandable that she’s confused. However, there is nothing to be done other than trying to fix it now, which she’s trying to do.

My kid did the exit interview when she left school for a semester. Then she went back to school right at the end of her grace period, so for some of her loans she’s used up the grace period and her first payment will be due immediately. It’s pretty confusing.

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@CompEngGirl123

You keep saying you only have 2 1/2 months grace period…but the fact is…you will have will have had the SIX months for Direct and NINE for Perkins because you have NOT been an enrolled student taking classes at your college since May. You, yourself stated clearly that you never took courses for the fall term. So…you were done in…May.

How much in loan repayment are you looking at? I think you need to plan to pay these loans starting in November for Direct Loans, and February for your Perkins.

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@twoinanddone When I said “I wouldn’t request a change on the NSLDS just to change my grace period start date because I think using the date I dropped my classes is more fair.”, I meant that I would NOT try to change the date on the NSLDS for the reason that I think that the August date is more fair. The only reason why I was considering contacting my school regarding the date reported was because my loan servicer made it seem like the date reported was an error and that I should correct it. Based on the comments on this thread though, it seems that the date reported was not an error and the grace period is actuallly based on my last day of attending classes. I understand that there are rules and it does not matter what I think is fair. I’m not arguing with you at all, I agree with you that what I think is fair does not matter and that my grace period start date determination is not dependent on what I think is fair. Also, you are right, maybe I don’t need to have a payment due date in order to be allowed to pay my first month’s payment and should look into that, so thank you for that suggestion.

@austinmshauri According to the studentaid.ed.gov website, “The grace period is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repayment on your loan.” I left school in May since that was when I last attended classes. However, I was enrolled for classes for the Fall 2018 semester until I dropped them in August before my first day of classes, so the date I dropped below half time enrollment would be August (unless if by “half time enrollment” the website really meant to be currently attending classses that are worth a total of 6 credits or more, but I always thought the defintion of “to enroll” was “to be signed up for”, and I was signed up for Fall 2018 classes until I dropped them in August, so I thought the date I dropped below half time enrollment was in August). So yeah, even though I read my MPN and exit loan counseling (which both essentially said the same thing as the studentaid website), I still wasn’t sure when my grace period would start because I thought that the date I left school and the date that I dropped below half time enrollment were different and wasn’t sure which one would be used. So to me, the rules were not clear, which is why I asked my loan servicer the question about my grace period in the first place, and I don’t feel like my confusion is necessarily surprising like you say it is. Also, I believe in my specific situation that starting my grace period in August would be more fair because that’s when I knew and when my school knew that I was not going to be attending classes for the Fall 2018 semester. Now, the situation you described where people are repeatedly signing up for classes and dropping out, that does not seem very fair, but that’s not what I did. And actually, those people could also probably repeatedly sign up for classes for a semester, drop out shortly after the first day of classes (and if the student’s school has similar tuition refund rules as the school I went to, the student will get a 100% tuition refund if they drop out early enough during the semester), sign up for the next semester, and repeat so I don’t think really using the last day of attending classes over the date someone dropped their classes would be much of an improvement on that problem anyways. Like I said, though, what I feel is fair (and really what anyone believes is fair) doesn’t matter because rules are rules.

@thumper1 You are right that my grace period for direct loans is 6 and perkins is 9. But, for me, I feel like it’s 2 1/2 months because even though my grace period started in May, I did not know I was dropping out until August and neither did my school which is why the process of updating my enrollment status on NSLDS and my loan servicer accounts got delayed. So that’s why I keep calling it a 2 1/2 month grace period, because that is what it feels like. For Perkins, however, it feels more like a 5 1/2 month grace period since the Perkins Loan grace period is 3 months longer, and my Perkins loan servicer actually updated my enrollment information and gave me a payment due date like the same day the NSLDS got updated, so really my worries/concerns are much more towards Direct loan repayment rather than Perkins loan repayment. However, if I would have waited until after the first day of classes to drop out, the last day I attended classes would be the same as the date I dropped out and I would have a direct loan grace period that really felt like a 6 month grace period and a Perkins loan grace period that really felt like a 9 month grace period, which I now realize is what I should have done but at the time I dropped out I wanted to drop out as soon as possible after I finally decided that I wanted to drop out because I thought it would be easier to cancel my housing contract before the day I would have to move into the dorms and I would have to be no longer enrolled for the 2018-2019 school year in order to be eligible for a housing contract cancellation. Now I know I should have waited 2-3 more weeks instead of dropping out right away after I knew I wanted to drop out, but I can’t go back now.

Also, I’m not very concerned about being able to afford payments. Most of my stress regarding loan repayment is making sure that things are set up on time and correctly, that I get payments done in time, and that I’m doing everything that I need to do and am not forgetting to do anything that I need to do. Because based on the long list of consequences of being delinquent or defaulting on student loans on the direct exit loan counseling, I really, really do not want to make a single mistake that could cause me to miss or be late on a payment. And, of course, the fact that’s it’s going to be a while before my enrollment information will be updated on my direct loan servicer account adds to that stress.

14

It’s great that you can afford the payments. Having multiple loans can be confusing. Do you know how much each payment is? I think I’d calculate 6 months from your last day of school and send your first check so it arrives before that date. If your Perkins loan isn’t due until 9 months after your last day of class then send a check in the 8th month.

Do you have online accounts so you can keep track of your payments? If so, you can see how long it takes them to apply a payment after you send it. That will help when you make your budget. We have some bills where payments are applied immediately and others where it seems to take longer to process. Watch their website to see which category each loan falls into. It might help to set up an automatic repayment from your bank. You can set them up weeks ahead of time so you don’t have to worry about missing a payment.

15

I believe you can set this up to have auto withdrawals from some account. I know my kids have NOT written a check in about 10 years…and one is definitely (at the end of) making loan payments.

I’m guessing most students set up some kind of online payment. They don’t send checks.

It is not the loan servicer’s issue that you chose to NOT attend college fall 2018. That was your decision, but it doesn’t change the fact that your last enrolled time was…May.

Have you calculated your loan payment? Is it really too much for you to pay?

Looking at the bright side…if you start repayment three months earlier than you thought…you will also be DONE with repayment 3 months earlier!

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(unless if by “half time enrollment” the website really meant to be currently attending classses that are worth a total of 6 credits or more, but I always thought the defintion of “to enroll” was “to be signed up for”, and I was signed up for Fall 2018 classes until I dropped them in August, so I thought the date I dropped below half time enrollment was in August)

Yes, it is the last date you actually were attending classes at least half time.

I am sorry your servicer gave you the wrong info, and you can certainly file a complaint: https://feedback.studentaid.ed.gov/s/?language=en_US . This won’t fix anything for you, because the rules are inflexible. However, FSA needs to be aware of servicer issues in order to correct them.

If you are unable to pay your full payment amount, you will want to apply for an income driven repayment plan immediately - you will also need to request that your loans be placed in forbearance while the request processes, in case it takes longer than the amount of time to your first payment due date. https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven .

In the future, you will no longer have a grace period for your Direct Loans. You have now used it up, and you won’t get a 2nd grace period. This is important to know, because you may borrow future loans that will get a grace period, but the ones you have now will be due as soon as you graduate/leave school/drop below full time if you enroll in a future term.