Lori Meadows
For most federal student loans, you will start making payments six months after you graduate, leave school, or drop below half-time enrollment. This six-month period is known as a grace period, which allows you to find stable employment and get your finances in order before starting to repay the loan. During this time, interest may still accrue on certain federal loans. For private student loans, repayment terms vary by lender, and some lenders may require you to start making payments while still in school. It is important to understand the repayment schedule and your financial situation to decide on the best repayment plan.
| Characteristics | Values |
|---|---|
| Time to start paying federal student loans | 6 months after graduation |
| Interest on federal loans | Accrues during the grace period |
| Parent PLUS loans | Start accruing interest from disbursement date |
| Parent PLUS loan repayment | Parents can choose to start immediately or defer until graduation |
| Private student loan repayment | Lender or servicer should contact the borrower |
| Graduated Repayment Period (GRP) | Interest-only payments for 12 months after the grace period |
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What You'll Learn
Federal loans have a six-month grace period after graduation
The six-month grace period provides a buffer for graduates to find employment or transition into their careers. This period is interest-free for subsidised federal loans, where the government covers the interest until the grace period ends. On the other hand, unsubsidised loans start accruing interest immediately, so tackling these loans first is advisable.
While the six-month grace period is standard, some private lenders may offer alternative repayment plans. For example, the Graduated Repayment Period (GRP) allows borrowers to make interest-only payments for 12 months after the grace period ends, providing budget flexibility during career establishment. However, monthly payments after the GRP will be higher than they would have been without it.
It's important to note that Parent PLUS loans, which are taken out by parents on behalf of their children, do not have a grace period. Repayment can be deferred until the child graduates, but interest starts accruing immediately upon disbursement.
To summarise, federal loans offer a six-month grace period after graduation, during which interest may accrue depending on the loan type. This period provides graduates with some financial breathing room before regular repayments commence.
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Interest accrues during the grace period
For most federal student loans, you will start making payments six months after you graduate, leave school, or drop below half-time enrollment. Most federal loans have a "
For example, if you have an unsubsidized federal loan, interest will start accruing the day you take out the loan. In contrast, subsidized federal loans have the interest paid by the government until six months after graduation. Private student loans may also offer a grace period, such as the Graduated Repayment Period (GRP) offered by Sallie Mae, which allows interest-only payments for 12 months after the grace period ends.
The accrual of interest during the grace period can significantly increase the total amount you owe. Therefore, if you can afford it, making payments during the grace period can help you save money in the long run. This strategy is especially beneficial for unsubsidized loans, where the interest grows daily. By paying off the interest as it accrues, you can avoid having it capitalized and added to your principal balance.
Additionally, consolidating your loans can impact the grace period. Once you consolidate, you lose any remaining grace period, and your payments will generally be due within 60 days. Therefore, it is essential to carefully consider the timing of consolidation and the potential impact on your repayment obligations and overall loan cost.
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Parent PLUS loans accrue interest from disbursement
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 a notable exception to this rule.
Parent PLUS loans accrue interest from the date of disbursement, and parents are responsible for repayment as soon as the loan funds are received. While parents can request a deferment, they have the option to start repaying the loan immediately or wait until their child graduates. It's important to note that Parent PLUS loans do not have a grace period, unlike other federal loans.
The interest rate for Parent PLUS loans disbursed between July 1, 2025, and June 30, 2026, is fixed at 8.94% for the loan's life. There is also 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 constant.
Parents can explore options such as consolidating Parent PLUS loans into a single federal direct loan or opting for an income-contingent repayment plan. Additionally, they may be able to receive a 0.25% discount on interest rates by setting up automatic monthly payments. It is worth comparing Parent PLUS loans with private student loans, especially if the parents have excellent credit, as the latter may offer lower interest rates.
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Private lenders should contact you about payments
For federal student loans, you usually start making payments six months after graduating or leaving school. This is known as the "grace period", during which interest will continue to grow. However, this varies depending on the type of federal loan. For instance, Parent PLUS loans do not have a grace period, and repayment can begin as soon as the loan funds are received.
Private student loans differ from federal loans in that the lender or servicer should contact you about your loan payments. They will provide you with information on when and how to pay your loan. This could be in the form of a monthly email or billing statement. Some lenders may even provide a "welcome kit" or a phone call when repayment begins. If you are unsure about your loan servicer, you can refer to your original loan paperwork, such as a promissory note or disbursement notice. If you cannot access these documents, you can check your credit report for the lender's name or contact your school's financial aid office for assistance.
It is important to note that private lenders typically offer a Graduated Repayment Period (GRP) benefit, which allows you to make interest-only payments for 12 months after your separation or grace period ends. This benefit is available for various types of undergraduate and graduate loans. However, your monthly payments after the GRP will be higher than they would have been without it. Therefore, it is advisable to pay more than the required amount whenever possible to save money over the life of your loan.
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$6.99
Graduated Repayment Periods offer interest-only payments for 12 months
For most federal student loans in the US, you will start making payments six months after you graduate, leave school, or drop below half-time enrollment. This is known as the "grace period", during which interest will continue to grow on your loan.
The Graduated Repayment Period (GRP) is a benefit offered by some lenders to help you manage your student loan payments when transitioning from school to your career. The GRP lets you make interest-only payments for 12 months after your separation or grace period ends. This benefit is available for students with eligible undergraduate, graduate, health professions graduate, MBA, law school, medical school, or dental school loans.
During the GRP, your monthly payments will be lower than they would otherwise be because you are only paying the interest on the loan. This provides budget flexibility while you establish your career. However, it's important to note that your monthly payments after the GRP will be higher than they would have been without it. Additionally, the GRP may affect your eligibility for borrower benefits or repayment incentives that require principal and interest payments.
To be eligible for the GRP, your loan must have been disbursed on or after July 1, 2013, and used to pay qualified higher education expenses at a degree-granting institution. You can check your billing statements or online account to see when you can apply for the GRP and which of your loans qualify for this benefit.
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Frequently asked questions
For most federal student loans, graduates have to start paying back loans six months after graduating, leaving school, or dropping below half-time enrollment.
No, you can pay them back sooner if you want to.
The "grace period" refers to the time between when a student leaves school and when principal and interest payments begin. For most federal student loans, the grace period is six months.
There isn't a standardized rule for private student loans. Your lender or servicer should contact you about when and how to pay your loan.
