Lori Meadows
The repayment period for student loans can differ depending on the type of loan and the lender. For federal student loans, repayment usually starts six months after graduation or dropping below half-time enrollment. Private student loans may also have a grace period, but some lenders require immediate monthly payments. Parent PLUS loans are an exception, accruing interest from their disbursement date, with parents having the option to defer repayment until their child graduates. Understanding your loan repayment schedule and exploring alternative options like income-based plans, deferment, forbearance, or refinancing can help manage student loan debt.
| Characteristics | Values |
|---|---|
| When do you start paying off student loans? | For most federal student loans, you start making payments six months after you graduate, leave school, or drop below half-time enrollment. For private student loans, it depends on the lender. Some lenders require you to make monthly payments as soon as the funds are dispersed, while others provide a grace period. |
| What is a grace period? | A grace period is a time after you graduate, leave school, or drop below half-time enrollment when you don't have to make payments. Most federal loans have a six-month grace period, but this may differ from lender to lender. Perkins loans (no longer issued since 2017) have a nine-month grace period. |
| Do parents have to start paying Parent PLUS loans right away? | Parents must start repaying Parent PLUS loans as soon as the child or school receives the loan funds. However, they can request to defer making payments until their child graduates or for an additional six months after their child leaves school. |
| What if you need more time to start paying back your loans? | There are several options for extending your student loan payments, such as student loan deferment and forbearance. Deferment usually lasts between six months to three years, and during this time, interest does not accrue on federally subsidized loans but does accrue on private or unsubsidized loans. Forbearance may pause or lower your payments for up to 12 months, and interest typically continues to accrue during this period. |
| Are there any other options for reducing the total loan amount? | Student loan forgiveness programs can reduce your total loan amount, but these programs have strict eligibility requirements. Federal loan refinancing can also make your monthly payments more manageable by consolidating multiple payments into a single payment with a possibly lower interest rate. |
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What You'll Learn
Federal student loans
For most federal student loans, you are not obligated to start making payments until six months after you graduate, leave school, or drop below half-time enrolment. This is known as the 'grace period', during which interest will continue to grow on your loan. Direct Loans, Grad PLUS Loans, and Stafford Loans (Direct Subsidized and Direct Unsubsidized) all have a six-month grace period. Perkins Loans had a nine-month grace period, but no new Perkins Loans have been issued since 2017.
Parent PLUS Loans are different; they do not have a grace period, so repayment must begin as soon as the loan funds are received. However, parents can request to defer making payments while their child is in school and for an additional six months after their child graduates, leaves school, or drops below half-time enrolment.
If you are having trouble keeping track of and paying multiple federal student loans, you may be able to combine them into one loan with a lower interest rate. This is known as a Direct Consolidation Loan. Additionally, you may qualify for the Public Service Loan Forgiveness program if you have made payments on a Direct Loan and work for the US government, military, or certain health agencies.
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Private student loans
For private student loans, your lender or servicer should inform you about when and how to pay back your loan. Some private student loans require payments while you are still in school, while others offer a grace period, which is a period after you graduate during which you don't have to make payments. If you can afford to make interest payments during your studies, you could save a significant amount of money in the long run. For example, if you take out a $12,000 loan with a 10-year payment term at a 6.6% fixed interest rate, setting aside $25 per month to make loan payments while in school would save you $535 in interest charges. This strategy is especially useful if you have private student loans or unsubsidized federal student loans that accrue interest while you're in school.
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Parent PLUS loans
Generally, for federal student loans, you start making payments six months after graduating, leaving school, or dropping below half-time enrollment. However, Parent PLUS Loans are an exception to this rule. Parent PLUS Loans, also known as Direct PLUS Loans, are federal education loans provided directly to parents of dependent students to help cover the costs of their child's college or career school. These loans do not have a grace period, so parents must start repaying the loan as soon as their child or the school receives the loan funds. Nonetheless, parents can request to defer making payments while their child is in school and for an additional six months after their child graduates or leaves school.
To apply for a Parent PLUS Loan, you must start by filling out the Free Application for Federal Student Aid (FAFSA). This is where you will first see the option for a Parent PLUS Loan. These loans are meant to supplement other financial aid offered to the student. One key difference to note is that a credit check is performed to determine any late payments and recent defaults in your credit history. After applying, the government will send your information to the school to confirm how much you can borrow. The money then goes directly to the school, and if there is any leftover, the funds are sent to the parent or the student with the parent's permission.
The interest rate for Parent PLUS Loans disbursed between July 1, 2025, and June 30, 2026, is 8.94%, with a 4.228% fee for loans disbursed on or after October 1, 2020. These rates can change annually on July 1, but once the loan is taken out, the rate remains fixed for its lifetime. It is worth noting that private student loans may offer lower rates than Parent PLUS Loans, especially for parents with excellent credit. As such, it is recommended to compare your options before deciding.
As of July 1, 2026, changes to PLUS loan eligibility will come into effect. Parents may only borrow a Parent PLUS Loan if their dependent student has already taken out their maximum annual unsubsidized loan amount. Additionally, there are new annual and aggregate loan limits: an annual limit of $20,000 per child and a lifetime limit of $65,000 per student.
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Loan repayment schedules
Generally, you do not start paying off your student loan right away. The specifics of when you start paying off your student loan depend on the type of loan and your enrollment status. For most federal student loans, you will start making payments six months after you graduate, leave school, or drop below half-time enrollment. During this six-month "grace period", interest will continue to accrue. Direct Loans, including Grad PLUS and Stafford Loans, have this six-month grace period.
Perkins loans, which have not been issued since 2017, have a nine-month grace period. Parent PLUS loans do not have a grace period, so repayment must begin as soon as the loan funds are received. However, parents can request to defer making payments while their child is in school and for six months after their child graduates, leaves school, or drops below half-time enrollment.
For private student loans, your lender or servicer should inform you about when and how to pay your loan. You can also make monthly interest payments while you're in school to lower your total loan cost and your monthly payments. Alternatively, you can make a lump-sum payment of the total interest accrued before your repayment period begins.
The length of your loan repayment term will affect your monthly payments. Federal loans typically have a standard repayment schedule of 10 years. Private student loans usually have repayment terms ranging from 10 to 15 years. The longer the loan repayment term, the lower your monthly payment will be. However, a longer repayment term may increase the total loan cost.
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Student loan forgiveness programs
Generally, for most federal student loans, you start making payments six months after you graduate, leave school, or drop below half-time enrollment. However, there are student loan forgiveness programs that can help erase some or all of your higher-ed debt.
The US Department of Education has forgiven billions of dollars in student loans through existing programs. The federal government offers several income-driven repayment (IDR) plans that allow you to cap your loan payments at a percentage of your monthly discretionary income. Payments can be as low as $0 per month, and your remaining loan balance may be forgiven in 20 or 25 years, depending on the plan and loan type.
Public Service Loan Forgiveness (PSLF) is another option for government and qualifying nonprofit employees with federal student loans. Eligible borrowers can have their remaining loan balance forgiven tax-free after making 120 qualifying loan payments on an IDR plan and 10 years of full-time public service work. Teachers employed full-time in low-income public schools may be eligible for Teacher Loan Forgiveness of up to $17,500 after working for five consecutive years.
Additionally, if you have a disability that severely limits your work ability, you may qualify for a Total and Permanent Disability (TPD) discharge, meaning you don't have to repay your federal student loans. The US Department of Education and Department of Defense also have special benefits for military service members with federal student loans.
The Segal AmeriCorps Education Award is another program where participants who complete a term of national service in an approved AmeriCorps program are eligible to receive an award to repay qualified student loans.
Lastly, borrower defense to repayment is a legal ground for discharging federal Direct Loans, and closed school discharge applies if your school closes while you're enrolled or soon after you withdraw.
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Frequently asked questions
For most federal student loans, you will start making payments six months after you graduate, leave school, or drop below half-time enrollment. Private student loans may also have a grace period of six months, but some lenders require immediate monthly payments.
A grace period is a time after you graduate, leave school, or drop below half-time enrollment when you don't have to make payments. Most federal loans have a grace period, but Parent PLUS loans do not. Interest will continue to grow during this time for most loans.
Student loan deferment and forbearance are short-term solutions if you need more time to start paying back your loans. The deferment period usually lasts anywhere between six months to three years. During this time, interest will not accrue on federally subsidized loans but will continue to grow on private or unsubsidized loans. Forbearance may pause or lower your payments for up to 12 months, and interest typically continues to accrue on all types of loans.
