The time period that determines you are in default can vary widely depending primarily on the kind of loan you have taken. For instance, if you are availing Federal loans and you somehow skip making a payment, you won’t directly be categorized under defaulters but in fact your condition will be that of a dereliction of duty and you will be provided a 9 month time before the institute terms you a loan defaulter.
On the other hand, Private loans won’t treat you with that leniency, in case you skip making a payment, mind it, you will be in default right there and then. Now being in default mean, you are required to clear up all your payments instantaneously. However, it’s not just that in fact being in default can create some really troubling issues for you like first of all you won’t be able to postpone your payments and it will blotch your credit history. This eventually will make it difficult for you to get credit cards, mortgages, auto loans etc.
It is important to know the exact duration of the grace period. Usually the Federal loans offer 6 months of grace period after you are done with your graduation. This period varies considerably in private loans so you need to clarify all such minutiae by asking your loan provider. You can certainly go for loan consolidation during the grace period as this consequently reduces the amount of monthly payments but on the down side, this can increase the period for repayment and will eventually make you pay more interest.
Other choices for you can be of loan postponement or Deferment and Forbearance. However, for the former case you need to be either unemployed, suffering from financial turmoil, studying in an accredited graduate fellowship or some rehab program. While in the latter case you can only avoid paying the principal amount but you have got to pay the interest rates after all. But despite all this, you still need to ask your loan provider for entering into forbearance.
What To Do When In Default:
However, in case you are in default you need to go for consolidation as early as possible. Well, it will help you combining all the loans into a single one which consequently will make it much simpler for you to repay the amount plus it will reduce the payment per month as well.
Aside from this you can also go for loan rehabilitation but make sure you settle for nominal monthly payment that you can pay feasibly. You can check out FFEL loans and Perkin loans rehabilitation rules and regulations to see which loan rehabilitation suits you.