Financial Aid Advice

Student Loans and Gap Years: The Importance of “Good Standing”

Posted by Paul Garrard, M.B.A. on July 21, 2014

One of the most important things you can do with your student loans, not only as a responsible borrower, but also to help protect and build your credit, is to be sure to keep them in “Good Standing”.

While you are in school, you should be able to defer your student loans as long as you are enrolled at least half time (as determined by your institution). But what if you decide to take a gap year before attending dental school? Do you have student loans from your undergraduate and/or post-baccalaureate degree that you need to consider? How should you handle them during the period of time between these programs and when you matriculate into dental school?

The following reminders may help:

  • Most loans (federal and private) have at least a 6 month window period on them (usually called a “Grace” period) before they come due. In most cases, you have to use the entire Grace period to lose it, so for example, if you graduate in May and you matriculate in the fall just a few months later, your loans will not come due before you are put back into an In-School Deferment on them when you enroll in dental school. Your Grace period will then start after you leave dental school.
  • If your loans come due before you matriculate into dental school (for example, if there is at least 6 months or more between programs), you can work with your loan servicer to either a) begin actively repaying them under a plan you can afford, until you enroll in dental school or b) consider postponing your payments through either Deferment or Forbearance, again, until you enroll in dental school. Your credit is protected under both of these options.
  • For details on repayment programs for federal loans visit www.studentaid.ed.gov/repay-loans/understand/plans.
  • For details on postponement options for federal loans visit www.studentaid.ed.gov/repay-loans/deferment-forbearance.
  • It is extremely important to remain in contact with your loan servicer(s) during any gap year, especially if you have private loans, as the terms and conditions of private loans are usually quite different than those of any federal loans you may have.

One more important reminder: Be sure to pay down any consumer or other similar obligations you may have prior to entering dental school. You cannot get financial aid (including loans) to cover consumer obligations, and you do not want to put yourself in a position starting dental school where you are carrying non-school related financial expenses that will cause you budgeting challenges in dental school.

About Paul Garrard, M.B.A.:

Paul Garrard

Paul Garrard, M.B.A.
American Dental Education Association

ADEA Financial Aid Consultant

Mr. Garrard has over 30 years of experience working with health sciences students, including dental students, helping them choose repayment strategies to responsibly repay their student loans.