What Is a Sub-Grace Period?
Though everyone deals with the world of finance on a daily basis, very few people possess a thorough understanding of it. The term “sub-grace period “ constitutes one of the many lesser-known financial concepts you may encounter if you use student loans to pay for your college education. A type of grace period, sub-grace period describes a predetermined period of time after which you must begin meeting certain loan obligations.
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Grace Period
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A grace period is a predetermined period of time after the due date of a payment during which you can make a payment without penalization. For instance, if your credit card comes with a 10-day grace period, you can pay your bill as many as 10 days after the due date and face no extra charges. Grace periods apply to everything from credit cards to rent, utilities, phone and Internet bills and loans. The length of a grace period depends upon the specifics of individual contracts.
Sub-Grace Period
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A sub-grace period is a type of grace period that exists as a subordinate clause to another type of payment extension. The name “sub-grace period” is derived from the subordinate nature of these types of grace periods. For instance, assume you receive a six-month deferment on a loan and a six-week sub-grace period after this deferment. Because you only receive the grace period as a stipulation of the deferment, the grace period exists as a subordinate clause to the deferment, therefore constituting a sub-grace period.
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Student Loans
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Sub-grace periods usually only apply to student loans. Because student loans help pay for a college education, and a college education does not guarantee immediate or gainful employment, these loans come with a number of provisions allowing recipients to push back repayment dates. When you push back repayment on a student loan, your student loan provider may allow you an extra grace period after the initial extension expires. This extra grace period qualifies as a sub-grace period.
Deferment and Forbearance
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Deferment and forbearance are the two methods of pushing back the repayment date on student loans. Any sub-grace period comes attached to one of these two stipulations. A deferment allows you to delay payments on a student loan in the event that you haven’t graduated yet, go back to school, lose a job or get called into active military duty. A forbearance allows you to delay payments on a student loan due to financial hardship. In some instances, little difference exists between the two. According to the book “Nolo’s Guide to California Law,” a forbearance proves easier to obtain than a deferment on public loans.
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