How Many Months After Graduation Do You Pay Student Loans?
Navigate the transition from graduation to student loan repayment. Discover key timings, what happens before payments start, and how to prepare.
Upon graduation or leaving school, a period of time passes before student loan payments become due. This waiting period is known as a grace period. It provides a transition phase, allowing individuals to prepare financially before repayment obligations begin.
What is a Grace Period?
A student loan grace period is a defined span of time after a student graduates, leaves school, or drops below half-time enrollment status during which loan payments are not required. This period allows individuals to prepare financially before repayment obligations begin. Interest may still accrue on certain loan types during this time.
Federal Student Loan Grace Periods
Most federal student loans, including Direct Subsidized and Unsubsidized Loans, come with a six-month grace period. This period automatically begins once a borrower is no longer enrolled at least half-time. Federal Perkins Loans provide a nine-month grace period.
Parent PLUS loans do not have an automatic grace period. However, borrowers can request a deferment to postpone payments for six months after the student graduates, leaves school, or drops below half-time enrollment. Graduate and professional students with Direct Grad PLUS loans receive an automatic six-month deferment.
Private Student Loan Grace Periods
Grace periods for private student loans vary, as they are set by individual lenders. Some private lenders offer a grace period comparable to federal loans, often six months. Other private loans may require payments to start immediately after disbursement or even while the student is still enrolled. Borrowers should review their specific loan agreements or contact their private lender to understand the exact terms.
Actions During the Grace Period
During the grace period, interest accrues on unsubsidized federal loans and private loans. This means the total amount owed can increase as interest accumulates. If accrued interest is not paid before the grace period ends, it may be added to the principal balance, a process known as capitalization. Capitalization increases the total loan amount, leading to higher monthly payments and a greater overall cost.
Making interest-only payments, or even full payments, during the grace period can help reduce the total loan cost. This proactive approach can lead to significant savings throughout the loan’s repayment term.
Getting Ready for Repayment
As the grace period approaches its end, it is important to prepare for the start of loan repayment. A key step is to identify your loan servicer, the company that handles billing and other services for your loan.
For federal student loans, borrowers can find their servicer by logging into their Federal Student Aid account dashboard on StudentAid.gov or by calling the Federal Student Aid Information Center. For private loans, servicer information is found in online account dashboards, recent communications, or loan documents.
Borrowers will receive a repayment schedule and their first bill from their loan servicer before payments are due. It is advisable to review these documents carefully to understand the payment amount, due dates, and available repayment plan options.
Updating contact information with the servicer and on StudentAid.gov helps ensure important updates and billing statements are received. Creating a personal budget during this time can also help in assessing affordability and planning for consistent payments.