Janice Lozano
The repayment period for student loans can vary depending on the type of loan and the lender. Most federal student loans offer a six-month grace period after graduation or dropping below half-time enrollment, while private student loans may or may not have a grace period. It is important to contact your loan servicer to understand the specific repayment terms and explore alternative options if needed. Understanding your circumstances and choosing the right repayment plan is crucial for financial success. Additionally, student loan forbearance is an option to pause or lower payments for those facing financial challenges.
| Characteristics | Values |
|---|---|
| When do you start paying federal student loans? | Six months after you graduate, leave school, or drop below half-time enrollment |
| When do you start paying private student loans? | There is no standardized rule. Contact your lender or servicer for more information |
| What is a grace period? | A time after you graduate, leave school, or drop below half-time enrollment when you don't have to make payments |
| Do federal loans have a grace period? | Yes, most federal loans have a six-month grace period. Perkins loans have a nine-month grace period. |
| Do private loans have a grace period? | Some private student loans have a six-month grace period, but some lenders require you to make monthly payments as soon as the funds are disbursed |
| What happens after the grace period ends? | Your first actual payment is typically due a month after the grace period ends |
| What if you need more time to start paying? | You can explore alternative payment plans, forbearance, deferment, or student loan forgiveness programs |
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What You'll Learn
Federal loans and grace periods
Federal student loans offer a grace period during which you are not expected to make payments after initially leaving school or dropping below half-time status. The Federal Stafford Loan, Federal Direct Loan, and Federal Perkins Loan are the most common types of student loans that offer a grace period.
Stafford Loans and Direct Loans have a six-month grace period, regardless of whether you borrowed subsidised or unsubsidised funds. The first payment on these loans will be due the month after the grace period ends. For example, if your grace period ends in December, your first payment will be due in January. It is important to note that if you let this six-month grace period lapse, you will not be eligible for another grace period in the future. However, if you return to school during the initial grace period and maintain at least half-time status, you will be allotted another six-month grace period.
Federal Perkins Loans have a nine-month grace period. After this period expires, the billing cycle starts, and interest begins accruing. The first payment on a Perkins Loan is due at the end of the first quarter of the billing cycle. For example, if your grace period ends in December, your first payment will be due in March. Additionally, the Federal Perkins Loan offers another benefit: if you return to school after the nine-month grace period expires, you will be awarded another six-month grace period at that time. Furthermore, every time you qualify for deferment, regardless of the type, you will always be granted a minimum six-month grace period following the end of the deferment.
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Private loan repayment
Private student loans differ from federal loans in terms of repayment options. Private loans can offer both in-school and deferred repayment options. After your separation or grace period, you will be required to make principal and interest payments.
There are several programs available for budget flexibility, such as the Graduated Repayment Period. You can also enroll in autopay, where your monthly payments are automatically deducted from your bank account. Many servicers will reduce your rate by 0.25% if you choose this option.
If you are struggling with your payments, you can modify your loan to lower your monthly payments by reducing your interest rate and possibly extending your loan term. You can also apply for a payment extension or a reduced payment plan.
If you have received a notice from a debt collector, your loan may have gone into default. In this case, ask your lender or servicer about options for getting out of default. You may be able to set up a payment plan. Act quickly to avoid consequences like collection fees and harm to your credit score.
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Loan servicers and contacting them
Loan servicers are companies that handle the billing and other administrative tasks associated with your student loan. They are the ones you will be in contact with when you need to make changes to your loan, such as applying for forbearance or deferment, or when you have questions about your loan.
For federal student loans, you will usually start making payments six months after you graduate, leave school, or drop below half-time enrollment. Private student loans, on the other hand, may require you to start making payments as soon as the funds are disbursed, although some may also offer a grace period. Therefore, it is important to contact your loan servicer to understand the terms of your loan and when repayment starts.
If you are unsure who your loan servicer is, you can find this information in your original loan paperwork, such as a promissory note or disbursement notice. If you cannot locate these documents, you can check your credit report for your lender's name or contact your school's financial aid office for assistance. Once you have identified your loan servicer, you can contact them to discuss your repayment options and determine a plan that works best for your financial situation.
Your loan servicer can guide you to a solution if you have concerns about making payments. They can help you explore alternative payment plans or apply for forbearance or deferment if you need more time to start repaying your loans. It is important to stay in communication with your loan servicer and keep them updated on any changes in your circumstances that may impact your ability to make payments.
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Loan repayment plans
The US Department of Education is working on improving federal student loan repayment options. Borrowers are encouraged to select a legal repayment plan that suits their needs and helps them achieve a sustainable financial path. The Department is also addressing illegal loan forgiveness promises made by the Biden Administration, which were ruled unlawful by federal courts.
The Trump Administration is committed to strengthening the student loan portfolio and simplifying repayment processes. They are urging borrowers enrolled in the SAVE Plan to transition to a legally compliant repayment plan, such as the Income-Based Repayment Plan. This is because the SAVE Plan was found to be unlawful by the Eighth Circuit Court of Appeals in February 2025, and borrowers in this plan cannot access loan benefits or make progress toward loan discharge programs.
Borrowers in the SAVE Plan need to take note of their loan balances as interest will start accruing from August 1, 2025. When the SAVE Plan forbearance period ends, borrowers will be responsible for monthly payments that include accrued interest and principal amounts. To help borrowers understand their options, the Department recommends using the Loan Simulator to estimate monthly payments, determine repayment eligibility, and identify the best repayment plan for their situation.
Additionally, the Department is working through a backlog of submitted IDR applications due to a processing pause by the previous administration. Borrowers switching from the SAVE Plan to another IDR plan can expect timely processing. The Department has also resumed collections on defaulted federal student loans and has communicated with borrowers about their legal obligation to repay their loans and the benefits of regular repayment progress.
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Loan forgiveness and forbearance
If you cannot afford your loan payments, you have several options to explore. One option is to enroll in an income-driven repayment (IDR) plan, which lowers your monthly payment. You may also be able to enroll in a deferment, which, unlike forbearance, does not accrue interest on subsidized federal student loans.
Forbearance is an option to postpone your loan payments for a set period. During forbearance, interest continues to accrue on all loans, including federal subsidized loans. You can either pay the interest during the forbearance period or have it added to the balance of your loans when the forbearance ends. The terms and fees associated with forbearance vary depending on the loan servicer and whether it is a private or federal student loan. Private student loan forbearance is generally more limited and less favourable than federal loan forbearance programs. It is important to contact your loan servicer as early as possible to discuss your options and understand the specific terms and conditions of forbearance.
Loan forgiveness is another option to consider if you are struggling to make payments. Loan forgiveness programs typically involve agreeing to work in a certain profession or sector, such as public service, teaching, or medicine, for a set period in exchange for loan forgiveness. These programs often have specific eligibility requirements and may only be available for certain types of loans, so it is important to research and understand the specific details of each program.
It is always a good idea to understand the various repayment options available to you and to stay in communication with your loan servicer. Exploring these options can help you find a solution that works for your financial situation and ensures you can manage your loan repayments effectively.
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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 in school.
There isn't a standardized rule for private student loans. Contact your loan servicer to find out when repayment starts.
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 and some private student loans have a six-month grace period.
If you're having trouble making payments, your loan servicer can guide you to a solution. Student loan forbearance is another option that may pause or lower your payments for up to 12 months.
Check your original loan paperwork or your credit report to find your lender's name. You can also contact your school's financial aid office for assistance in locating your lender or servicer.
