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Grace Period
If you have a federal loan, you get only one grace period, and it usually lasts 6 months. (If you have an alternative loan, grace is at the discretion of your lender.)
Your grace period starts as soon as you stop going to school or drop below half-time status. During your grace period, you don't have to make any payments on your student loans.
| If you have a… | And you… | Then… |
|---|---|---|
| Subsidized federal loan | Pay during grace | Your lender may apply your payments directly to your principal balance. |
| DON'T pay during grace | You may pay more in interest over the life of the loan than if you had made payments during the loan's grace period. | |
| Unsubsidized federal loan | Pay during grace | Your payments reduce the amount of interest added to your principal balance (through "capitalization"). You may also request that your lender/servicer apply any payments that exceed the amount of interest directly to the principal balance. |
| DON'T pay during grace | You may pay more in interest over the life of the loan than if you had made payments during the loan's grace period. | |
| Alternative (private) loan | Are given grace by the lender | Depending on your lender, any payments during grace may reduce the amount of interest added to your principal balance. |
| Are NOT given grace | Depending on your lender, you may need to start paying back your loan as soon as you stop going to school or drop below half-time status. |
Helpful Tips
- The purpose of the grace period is to give you time to find employment and prepare for loan repayment.
- To find out whether a grace period is available for your specific loan, be sure to contact your lender or loan servicer before you graduate, leave school, or drop to less than half-time enrollment.
- You can pay your loan during grace. Making interest payments or applying money toward the principal balance will help you reduce the amount of your total debt and pay off your loan sooner.
Supporting Content
Related Information
Calculators
Test Your Knowledge
Susan borrows $10,000 in subsidized loans at 6.8% interest. If she pays $50 every month during grace, Susan will:
- Pay off her debt 5 months early.
- Save $291.65 in interest.
- Be allowed to extend her grace period.
1 and 2.
The earlier you start paying back your loan, the more you save in time and money!