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How Student Financial Accounts Change After Graduation

Checking accounts, credit cards and loans for college students often change once a diploma is in hand.

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Many student checking accounts with no monthly fees turn into traditional accounts after graduation. So grads take note: You won't be able to avoid those fees forever.

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As college students graduate and prepare to take on the responsibility of adult life, they’ll need to worry about how their financial accounts – specifically, student checking accounts, credit cards and loans – will change after they lose their “college student” status

Most student-labeled accounts carry certain privileges, which may disappear after college grads transition to non-student accounts. Knowing how financial accounts change after graduation can help you avoid fees, save money and get a head start on tackling college debt.

Student checking accounts “grow up.”

At most of the nation’s largest banks, a basic checking account comes with a monthly fee that can usually be avoided with a minimum balance or direct deposit. Fortunately, many banks provide student checking accounts that have no monthly maintenance costs. 

There are rules, however, that force the conversion of a student checking account into a traditional checking account, so college students can’t expect to avoid monthly fees forever. The date that a student checking account expires can vary from bank to bank. 

For instance, Chase’s College Checking account becomes a regular checking account after five years from the date the account was opened. Meanwhile, BB&T’s Student Banking account will automatically convert to a regular account on the customer’s 24th birthday or 60 days following graduation (whichever is last).

Depending on student checking account rules, college graduates may be able to continue enjoying a free checking account even though they are no longer students. In the case of Chase, for example, someone can still use a student checking account for one year without monthly fees if he or she graduates college within four years.  

Student credit cards don’t change much.

Credit card issuers tend to offer student versions of their regular credit cards. Basically, a student credit card often carries the same features, such as rewards and card protection, as the non-student version of the card. 

There are three major differences with a student credit card: the interest rate, credit limit and qualification requirements.

Compared to a regular credit card, student credit cards have higher APRs and smaller credit limits since students are considered higher-risk borrowers. When applying for a student credit card, issuers often ask for proof of income or a co-signer.

After securing a reliable source of income, college grads should request an APR reduction and a credit line increase. Know that the credit card issuer may ask for your income and pull your credit report before addressing your request.

College grads can also ask that their student credit card be converted to another credit card offered by the same issuer.

Student loans enter repayment period.

Student loan debt is likely a major concern around graduation, as education loan servicers typically begin to send out notices of repayment in the weeks before a student’s expected graduation date.

Direct Loans and Federal Stafford Loans have a six-month grace period before payments are due. PLUS loans have no grace period, so payments are due right after graduation. For private loans, lenders may have varying repayment policies.

Those who are able get a job after graduation should begin to make repayments. Typically, graduates can make bigger or extra payments to reduce the interest paid and the total cost of the loan – a more aggressive approach for anyone who doesn’t want to hold onto student loans for decades to come.

Graduates who have a tough time repaying loans should contact their loan servicers to ask about other repayment plans, including deferment, forbearance or an income-based plan.