When do I have to start repaying my student loans?

Most student loans enter repayment within 6 months of the borrower graduating or dropping below half-time enrollment.

Impact of Less than Half-Time Enrollment

When a borrower drops below half-time enrollment, the borrower starts using up part of his or her student loan grace period. If the borrower returns to half-time or greater enrollment, the loans are returned to an in-school deferment status. However, when this borrower graduates, the grace period will be shorter because the borrower already used up part of it.

For example, suppose a borrower drops below half-time enrollment in the fall. Assuming that the fall term is 4 months long, the borrower will use up 4 months of the 6-month grace period. If the borrower returns to half-time or greater enrollment in the spring and then graduates, the borrower will enter repayment only 2 months after graduation, instead of 6 months after graduation.

Now, if the borrower drops below half-time enrollment in both the fall and spring terms, with total duration of 6 months or more, the borrower will use up the entire grace period and enter repayment while still in school. If the borrower returns to half-time enrollment in the next fall, the loans will be in an in-school deferment then, but will return to a repayment status immediately upon graduation, with no grace period.

Grace Periods by Loan Program

The Direct Loan and the Grad PLUS Loan have a 6-month grace period.

The Parent PLUS Loan normally enters repayment within 60 days after full disbursement. However, Parent PLUS Loans first disbursed on or after July 1, 2008 may be deferred while the student is in school and for 6 months after the student graduates or drops below half-time enrollment.

The Perkins Loan has a 9-month grace period.

Direct Consolidation Loans enter repayment within 60 days of disbursement, often within 30 days. Consolidation during the grace period will cancel the remainder of the grace period.

Most private student loans also have a 6-month grace period. However, some private student loans specify a maximum duration for the deferment from the date of disbursement, so a borrower who takes an extra year to graduate may have to start repaying one or more of his or her private student loans while the student is still enrolled and  prior to graduation.

Impact of the Grace Period on Interest

Interest on unsubsidized loans continues to accrue during the grace period. If the borrower does not pay the interest as it accrues, it will be capitalized when the loan enters repayment.

The federal government pays the interest on subsidized loans during the grace period. However, Direct Subsidized Loans first disbursed on or after July 1, 2012 and before July 1, 2014 are treated the same as unsubsidized loans during the grace period. This was due to a cost-saving measure included in the Consolidated Appropriations Act of 2012.

Can the Grace Period Reset?

The grace period may reset back to 6 months if the borrower is called to active duty military service for more than 30 days during the grace period.

In addition, members of the U.S. Armed Forces may be eligible for a deferment after the end of military service. The military service deferment ends 180 days after the end of active duty military service. The post-active duty student deferment ends 13 months after the end of active duty military service. If a veteran is eligible for both deferments, the deferments run concurrently. The deferments (but not the grace period) may expire upon the veteran’s return to half-time enrollment.