Lana Oconnell
The time at which you start paying off student loans depends on the type of loan and your circumstances. Federal student loans usually require you to start making payments six months after you graduate, leave school, or reduce your enrolment, though Parent PLUS loans must be paid off as soon as the loan funds are received. Private student loans vary, with some requiring payments while you're still enrolled, and others offering grace periods. If you're unsure about your loan type and repayment schedule, you can refer to your original loan documents or contact your loan servicer.
| Characteristics | Values |
|---|---|
| When do you have to start paying federal student loans? | You have to start paying federal student loans six months after you graduate, leave school, or drop below half-time enrollment in school. |
| When do you have to start paying private student loans? | Your lender or servicer should provide you with information on when and how to pay your loan. |
| 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. |
| Do Parent PLUS loans have a grace period? | No, parents must start repaying the loan as soon as the child or the school receives the loan funds. |
| What is the grace period for Perkins loans? | Perkins loans have a nine-month grace period. |
| When is the first payment due for federal loans? | The first payment is due one month after the grace period ends. |
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What You'll Learn
Federal loans have a six-month grace period after graduation
Federal student loans typically offer a six-month grace period after graduation, during which no payments are required. This grace period is designed to provide graduates with some financial breathing room as they transition from student life to the workforce. It's important to note that interest may still accrue during this period, so the loan balance could grow.
The six-month grace period is standard for most federal loans, including Direct Loans, Grad PLUS Loans, and Stafford Loans (both Direct Subsidized and Direct Unsubsidized). These loans share the common feature of not requiring immediate repayment upon graduation. This differs from Parent PLUS Loans, which do not offer a grace period. Parents with these loans must start repaying as soon as the loan funds are received, although they can request a deferment while their child is in school and for six months after graduation.
The six-month grace period provides graduates with important financial flexibility. During this time, graduates can focus on finding employment, establishing their post-graduation living situation, and creating a budget that accommodates their new student loan payments. It's a window of opportunity to get financially settled before the regular loan payments begin.
Towards the end of the grace period, former students should decide on a repayment plan and consider consolidating their federal student loans. They can also explore options like enrolling in autopay, which can sometimes lead to interest rate reductions. Additionally, if a graduate is struggling to find employment or faces other financial challenges, federal loans offer the possibility of deferring or pausing payments beyond the grace period.
While the six-month grace period is a standard feature of federal student loans, it's always beneficial to review the specific terms of your loans. Understanding the details of your loan agreements, including interest rates and repayment timelines, is crucial for effective financial planning. Staying informed about your loan servicer and maintaining open communication with them can help ensure a smooth repayment process.
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Private lenders should contact you about repayment
Private student loan lenders are not required to offer you any relief, and it is up to them to contact you about repayment. However, reputable private lenders will work with you to make a plan to avoid default. You can also contact your servicer to ask about options for reducing your payment, such as an extended repayment plan. This will cost you extra interest overall, but it may be a good option for you.
Before contacting your servicer, it is a good idea to write up a budget that cuts back on other expenses where you can. Gather documentation like pay stubs, bank statements, and bills. Then, you can call, email, or send a letter to your servicer to ask about your options. If you are a servicemember, you are entitled to have your interest capped at 6%.
If you are struggling to make payments, act quickly. The sooner you get out of default, the sooner you can avoid consequences like collections fees and harm to your credit. You can also get free, qualified help from credit counseling organizations.
It is important to note that private lenders may offer lower interest rates than federal loans, but you will lose the flexible repayment options and borrower protections offered by federal student loans. Additionally, private loans often require a cosigner, and it is important to keep them informed about the status of your loan.
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Interest accrues during the grace period
Generally, once you graduate, drop below half-time enrolment, or leave school, your loan repayment begins. Most federal loans have a "grace period", which is a time after you graduate, leave school, or drop below half-time enrolment when you don't have to make payments. However, interest will continue to accrue during this grace period.
For instance, if you have unsubsidized loans, interest will accrue on your loans during the grace period. This means that interest that accrues during the grace period will be added to the loan principal when repayment begins, a process known as "capitalization". Making payments during a grace period is not required, but it is something to consider if you can afford it, as it will help you avoid unnecessary interest capitalization.
Some loan types, such as Graduate PLUS and Parent PLUS loans, are not eligible for a grace period. However, if you have one of these PLUS loans, you may be able to request a deferment. For Parent PLUS loans, 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.
It is important to note that there is some confusion and debate around what happens to the accrued interest at the end of the grace period. Some sources indicate that accrued interest during the grace period will be capitalized, while others question whether it is forgiven or simply disappears. It is always a good idea to consult official sources or seek professional advice for the most accurate and up-to-date information regarding student loan repayment, including grace periods and interest accrual.
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Perkins loans have a nine-month grace period
Generally, once you graduate, drop below half-time, or leave school, your loan goes into repayment. However, Federal Perkins Loans have a nine-month grace period. This means that you have nine months after leaving school during which you are not required to make payments. Interest does not accrue during this time.
If you return to school during this nine-month grace period and enroll for at least half-time, you will be allotted another nine-month grace period. Even if you allow the entire nine-month grace period to expire and then return to school, you will be awarded a six-month grace period at the time you exit. Every time you qualify for deferment, regardless of the type (student, economic hardship, unemployment, etc.), you will always be granted a minimum six-month grace period following the end of the deferment.
If you have received loans with different grace periods, you must repay each loan according to the terms of its promissory note. You must pay the minimum monthly payment amount that applies to each loan that is not in a grace or deferment period.
The billing cycle for Federal Perkins Loans starts after the nine-month grace period expires, and interest begins accruing. You will not be expected to make your first payment until 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.
It is important to note that no new Perkins Loans have been issued since 2017.
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Find your loan servicer on your StudentAid.Gov account
Generally, for federal student loans, you will start making payments six months after you graduate, leave school, or drop below half-time enrollment. Private student loan providers should inform you about when and how to pay your loan.
If you are unsure about who your loan servicer is, you can find out by accessing your StudentAid.Gov account. Here is a step-by-step guide on how to find your loan servicer on your StudentAid.Gov account:
- Log in to your StudentAid.Gov account: Visit the StudentAid.Gov website and log in to your account using your credentials. You may need to create an account if you don't already have one.
- Identify your loan type: Once you are logged in, navigate to your account dashboard or profile section. Here, you should be able to see information about your student loans, including the loan type. Identify whether your loan is a federal loan or a private loan.
- Select the appropriate servicer: Based on your loan type, select the corresponding servicer. For example, if you have a federal loan that begins with the letter "E," you may be directed to a servicer like Nelnet. If your loan is a private loan, you may need to select a different servicer.
- Bookmark your servicer's website: Once you have identified your servicer, click on the link to their website. Be sure to bookmark the web address for easy access to your loan information in the future.
- Contact your loan servicer: After accessing your servicer's website, you can explore the site to find their contact information, such as a customer service phone number or email address. Contact them to discuss your specific loan details and repayment options.
By following these steps, you can find your loan servicer on your StudentAid.Gov account and obtain the information you need to manage your student 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.
Your lender or servicer should provide you with information on when and how to pay off your private student loan.
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. For most loans, interest will continue to grow during your grace period.
