Grace-Period Follow-Up Steps Help Keep Borrowers Informed
Submitted by Linda Athearn, Account Executive,
USA Funds Services
Federal Stafford-loan borrowers generally have a six-month grace period
after they leave school, during which the borrower is not required to make
payments. Toward the end of the grace period, the borrower and loan servicer
establish repayment schedules and review alternative repayment plans. USA
Funds®’ online Best Practices in Debt Management Manual recommends
that financial-aid administrators contact borrowers during the grace period
to encourage them to begin repayment on time. The following are some tips
for keeping students up-to-date about their education-loan-repayment status:
- Send at least two letters during the grace period to all students
who have received Federal Stafford loans. The purpose of the letters is
to help ensure
that borrowers begin repayment on time and are informed of the options
available if they are unable to begin or continue to make payments on a
Keep copies of all letters mailed during the borrower’s grace period
in the borrower’s financial-aid file. Mail all correspondence in envelopes
stamped “Forwarding and Address Correction Requested.”
All letters should provide a date – two weeks from the day
the letters are sent is a good time frame – by which the student
borrower must reply. Financial-aid staff should contact borrowers
who do not
document all telephone contact.
- Seek more-current contact information for borrowers whose letters returned
are unopened. If necessary, send letters and make follow-up calls to
the addresses of parents and all references in an effort to contact the borrower.
Update school records with any new data obtained regarding the student’s
address, telephone number, e-mail address and other contact information.
Advise the borrower’s lender of new information received.
Send letters with language that is appropriate for borrowers’ specific
length of time before repayment begins.
More information and sample grace-period follow-up letters to borrowers
are available in the Best Practices in Debt Management Manual.
To access the manual, visit USA Funds®’ Web site, www.usafunds.org, and
select “Financial-Aid Professionals,” “Debt Management” and “Best
Practices in Debt Management Manual.”