Repayment starts after your grace period ends, not when you graduate

Most federal student loans give you a grace period — a set number of months after you leave school before your first payment is due. For Direct Loans and Federal Family Education Loans (FFEL), that grace period is six months. For Perkins Loans, it is nine months. During the grace period, you owe nothing and interest does not accrue on subsidized loans (though it does on unsubsidized loans, and that interest gets added to your balance when repayment starts).

Private student loans work differently. Most have no grace period at all — some require payments while you are still in school, others start six months after graduation, and a few offer longer windows. You need to check your promissory note or contact your lender to know which applies to you.

The key date is not graduation day. It is the date your school reports to your loan servicer that you are no longer enrolled at least half-time. That triggers the clock on your grace period. If you drop to part-time status, take a semester off, or transfer schools, the grace period may restart.

Key Takeaways

  • Federal Direct Loans and FFEL loans have a six-month grace period after you stop being enrolled at least half-time; Perkins Loans have nine months.
  • Interest accrues on unsubsidized loans during the grace period and gets added to your balance when repayment begins, but subsidized loans do not accrue interest during this time.
  • Private student loans usually have no grace period or a shorter one than federal loans, so check your promissory note to know when your first payment is due.
  • Your servicer will send you a repayment plan notice at least 15 days before your first payment is due, which tells you the amount, due date, and your repayment options.
  • If you do not make a payment by the due date, your loan enters default after 90 days of non-payment, which damages your credit and can trigger wage garnishment.

How the grace period clock starts

The grace period begins when your school notifies your loan servicer that you are no longer enrolled at least half-time. "Half-time" means different things at different schools — it might be six credit hours per semester at one college and nine at another — so check with your registrar if you are unsure whether you still may have access to.

If you are in school and your loans are already in repayment, changing your enrollment status can restart the grace period. Some borrowers use this to delay payments, but it only works if your school actually reports the change. If you drop classes but do not officially withdraw, your school may not report it, and your servicer will not know.

If you are unsure when your grace period started or when it ends, log into your account on studentaid.gov (for federal loans) or contact your servicer directly. Your servicer's name and phone number appear on your loan statements and on the Federal Student Aid website.

What happens when the grace period ends

About 15 days before your grace period ends, your servicer must send you a notice that includes your repayment plan, the amount of your first payment, and the due date. This notice is called a repayment plan notice. Read it carefully — it tells you which repayment plan you are on by default (usually the Standard 10-year plan for federal loans) and what other plans you can choose instead.

You do not have to accept the default plan. Federal loans offer several repayment options: Standard (10 years, fixed payments), Graduated (10 years, payments start low and increase), Extended (25 years, fixed or graduated payments), and income-driven plans (payments based on your income, ranging from 10 to 25 years). You can change plans at any time, even after you start paying.

Your first payment is due on the date listed in the notice. If that date falls on a weekend or holiday, it is due the next business day. If you miss the due date, you have a 15-day grace period before the loan is considered delinquent. After 90 days of non-payment, the loan enters default.

Interest during the grace period on unsubsidized loans

On subsidized loans, the federal government pays the interest that accrues during your grace period. You owe only the principal when repayment starts.

On unsubsidized loans, interest accrues from the moment the loan is disbursed — including during school and during the grace period. When your grace period ends, that unpaid interest is capitalized, meaning it is added to your principal balance. You then pay interest on the interest, which increases the total amount you owe.

Some borrowers choose to pay the accrued interest during the grace period to avoid capitalization. This is optional but can save money over the life of the loan. If you want to do this, contact your servicer to ask how to make a payment toward interest only.

Deferment and forbearance delay repayment

If you cannot afford to start paying when your grace period ends, you may be able to postpone payments through deferment or forbearance. These are not the same thing, and which one you may have access to for depends on your situation and loan type.

Deferment is available if you are in school, unemployed, experiencing economic hardship, or in certain military or public service situations. During deferment, interest does not accrue on subsidized loans, but it does on unsubsidized loans. Deferment periods can last up to three years, and you can request it multiple times.

Forbearance is available to almost anyone who cannot pay, regardless of the reason. Interest accrues on all loans during forbearance. Forbearance periods last three to six months and can be renewed, but there are limits on how much total forbearance you can use. You must request forbearance before your grace period ends or after you miss a payment.

Both deferment and forbearance stop the clock on delinquency and default, but they do not erase missed payments that already appear on your credit report.

What happens if you miss your first payment

If your first payment is due on a specific date and you do not pay by that date, your loan becomes delinquent immediately. Delinquency appears on your credit report and can lower your credit score.

After 90 days of non-payment, your loan enters default. Once a loan is in default, your servicer can begin wage garnishment (taking money directly from your paycheck), offset your tax refunds, and refer your debt to a collection agency. Default also makes you ineligible for income-driven repayment plans and other federal loan benefits.

If you know you cannot make your first payment, contact your servicer before the due date. You can request forbearance, ask about income-driven plans with lower payments, or discuss a temporary payment arrangement. Acting before you miss a payment is always better than trying to recover after default.

Income-driven repayment plans and when they start

If you choose an income-driven repayment plan, your first payment is still due on the date your servicer specifies — but the amount may be much lower than the Standard plan. Income-driven plans calculate your payment based on your discretionary income and family size, which can result in payments of $0 if your income is low enough.

There are four income-driven plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR). Each has different income thresholds and forgiveness timelines. You can switch between plans at any time, and your payment recalculates each year based on your current income.

To enroll in an income-driven plan, you must submit your income information to your servicer. You can do this on studentaid.gov or by contacting your servicer directly. Your servicer will tell you what documents you need — usually a recent tax return or pay stub.

Frequently Asked Questions

Do I have to start paying on the exact date my servicer says, or is there a grace period after that date?

Your payment is due on the specific date listed in your repayment plan notice. You have until 11:59 p.m. on that date to pay. If you miss that date, your loan becomes delinquent immediately, though you have 15 days before it is reported to credit bureaus. After 90 days of non-payment, the loan enters default.

What if I am still in school but my grace period already started?

If your school reported that you dropped below half-time enrollment, your grace period started even if you are still taking classes. Contact your school's registrar to confirm your enrollment status, and if it was reported incorrectly, ask them to correct it with your loan servicer. Your servicer can restart your grace period if the enrollment status changes.

Can I pay during my grace period, or should I wait until it ends?

You can pay at any time, even during the grace period. Paying early reduces the principal balance and saves you interest over the life of the loan. If you have unsubsidized loans, paying the accrued interest during the grace period prevents that interest from being capitalized when repayment starts.

If I have multiple loans, do they all start repayment on the same date?

No. Each loan has its own grace period that starts when your school reports you are no longer enrolled at least half-time. If you have loans from different schools or different loan types, they may have different start dates. Your servicer will send you a separate notice for each loan showing when repayment begins.

What happens to my student loans if I go back to school after my grace period ends?

If you re-enroll at least half-time, your grace period restarts. Payments pause while you are in school, and a new grace period begins when you leave again. However, if you are already in repayment when you re-enroll, contact your servicer to make sure they know about your enrollment change — you may need to provide proof from your school.