What is a Student Loan Grace Period?


When you’re looking at the terms of your student loan, you’ll come across something called the student loan “grace period.” A grace period is a certain length of time when you aren’t required to make payments on your student loans. When you graduate or leave school, you’ll enter this period.

Learn more about how it works, and what you need to know about your student loan grace period below.

How long is a grace period?

The length of a grace period varies depending on the source and type of your loan. For federal student loans, you are typically given six months after you graduate or leave school before you are required to begin repayment. For private student loans, some lenders offer the same length of time before you have to start making payments. With others, you’ll enter repayment as soon as the loan is disbursed.

If you’re not sure, check with your lender or loan servicer to see if they offer a grace period, or how long it is.

When does the grace period begin?

If it is given, you’ll usually enter the grace period as soon as you graduate, drop below half-time enrollment, or enter a period of deferment.

Does interest accrue during a grace period?

If you have a Direct Subsidized Loan through the Department of Education, interest will not accrue during your grace period. For all other loan types, interest will continue to accrue during this time. After your grace period is over, interest will be capitalized, or added to your overall loan balance.

How to Take Advantage

Grace periods can be great to find your footing after you graduate or leave school. It gives you time to find a job and get settled in to life after college. However, if you can, starting to make payments during this period is a great way to get ahead on repayment early on. Create a budget to see how much money you can put toward your student loans during your grace period (if any). If starting payments before your grace period is up is too much stress on your budget, consider paying the interest each month instead. It may not seem like a lot, but it can really help to keep your balance down once you enter the official repayment phase.