After COVID strangled the economy, the federal government froze all student loan repayments until August 31, 2022. Beyond that, you typically have a six-month grace period after graduation before your first payment is due if you have a federal student loan.
Finding Out When Your Student Loan Payments Start
Outside of the government’s payment holiday, different loans and lenders have their own terms. If you have a federal loan, then your six-month grace period begins after you graduate, dip below half-time enrollment, or leave school. That specific grace period applies if you have a Direct Subsidized, Direct Unsubsidized, or Federal Family Education Loan.
If you have a Perkins Loan, you will have a grace period of nine months. However, a PLUS Loan will go into repayment as soon as it is dispersed. However, if you’re a graduate and a professional student who has a PLUS loan, it will be placed on automatic deferment while you’re in school. And then you have that same six-month grace period after graduating, dipping below half-time enrollment, or leaving school altogether.
Private Student Loans
These are loans from private companies, not the government. Sometimes they offer a grace period like the government. But not always. If you don’t know the terms of your private student loan, make sure you review that documentation.
If your private lender has a grace period built into the agreement, find out if the interest accrued during that will be capitalized when that period is over. This means the interest amount will be added to the principal balance.
If that principal balance grows this way, that means a new, higher interest amount is charged on that larger amount. This could increase your monthly payments.
Subsidized Student Loans
A subsidized student loan is a federal loan based on financial need, which you’ll need to document when filling out the FAFSA. You will also have to disclose all grants and scholarships at this time.
These have lower loan limits than unsubsidized loans and you won’t accrue interest—that cost is paid by the government. Also, these loans only apply to undergraduate students who are enrolled at least half-time.
It’s important to note that subsidized loans are only given through the government; private loans are not subsidized.
Unsubsidized Student Loans
Like subsidized loans, unsubsidized loans are federal loans. The difference is that the government doesn’t cover the interest. These loans are often taken out by students who have access to a larger income.
The loan limits are also typically higher. Additionally, these loans are available for students seeking undergraduate, graduate, or professional degrees. (All enrolled at least half-time.)
Student Loan Deferment
If the answer to “When does student loan repayment start?” leads you feeling like you’re drowning financially, you may qualify for a student loan deferment. This allows you to temporarily postpone your repayments. Some people also seek deferments if they are going back to school or pursuing a fellowship.
If you have a direct subsidized loan, a direct unsubsidized loan, or a grad PLUS loan, it will automatically be placed in deferment while you’re enrolled at least-half time in college and six months after. This is known as “in-school deferment.” Most private lenders offer something similar. But if you have a private lender, be clear those terms.
Additional deferments include:
- An in-school parent deferment is for Parent PLUS It must be requested (not automatic) and will typically last while their child is in school and for six months after graduation or dipping below half-time enrollment.
- If you’re having difficulty landing a job or receiving unemployment benefits, you may qualify for unemployment deferment, which can last for up to three years.
- If you’re employed but earn less than 150% of the poverty guideline for your family size and state of residence, you may quality for an economic hardship deferment. This can also last for up to three years, but you will have to reapply every year.
- You can also apply for an economic hardship deferment if you serve in the Peace Corps, however you won’t need to reapply annually.
- If you’re on active duty in the military, you could qualify for a deferment for the duration of your service and 13 months afterward.
- If you’re battling cancer, you can apply to defer loans while undergoing treatment and six months beyond.
- For those in a different kind of treatment—for vocational, drug abuse, mental health, or alcohol abuse—the federal government offers deferment options.
Deferment may pause payments, but interest continues to accrue for most loans, including direct unsubsidized and private loans. This means your balance will increase between the beginning and end of your deferment.
Subsidized loans, by their nature, do not require interest payments from the lender. The same is true of Perkins loans.
Student Loan Forbearance
Forbearance is similar to deferment in that you can pause your payments. The difference is that borrowers in deferment are not required to pay the interest that accrues if they have a qualifying loan. But with forbearance, you cannot escape paying the accruing interest, no matter the type of loan.
There are different types of forbearance. Most will require you to prove you’re eligible.
- You can apply for general forbearance if you have federal direct Loans, Federal Family Education (FFEL) Program loans, and Perkins loans. This will be granted for no more than a year at a time. If that is not enough, you can request another—but the limit is three years.
- You can also pursue a mandatory Your loan server must grant these if you can prove you’re eligible. Examples include:
- You’re currently serving in AmeriCorps and received a national service award.
- The U.S. Department of Defense Student Loan Repayment Program will allow you to only partially repay your loans.
- You’re serving in either a medical or dental internship/residency program and meet particular requirements.
- You’ve been activated by the governor as a member of the National Guard, but you’re not eligible for a military deferment.
- If the total amount you owe each month for all your federal student loans you is 20% or more of your total monthly gross income, you can pursue a Student Loan Debt Burden
- You’re performing a qualifying teaching service.
While in forbearance, you have two options:
- Pay the interest as it accrues.
- Allow it to accrue and then be added to your loan principal balance at the end of the forbearance period.
If you don’t do either, the total amount you will need to repay over the life of your loan may be larger.
Refinancing Student Loans
If you do not qualify for deferment or forbearance, refinancing is another route to explore.
This involves a private lender paying off one or all your current loans and then giving you a new loan with a new rate. (And potentially a new lifetime.) There are pros and cons to refinancing your student loan.
A lower interest rate means you’ll pay less over the life of the loan. New rates will depend on certain considerations, including your credit score, whether you choose a fixed or variable rate, along with how long you have to repay everything. You can also add a co-signer.
But refinancing has its tradeoffs.
Remember, you need a private lender to refinance. This means you’ll lose access to programs like income-driven repayment plans and Public Service Loan Forgiveness, along with protections like federal deferment and forbearance options.
Furthermore, you won’t be eligible for federal loan consolidation: taking multiple federal loans and combining them into one loan for up to 30 years.
You may apply and not be offered a low enough interest rate to make an appreciable difference in your monthly payment. Your interest rate depends on your creditworthiness, which can take time to build.
Loan Forgiveness Options
The answer to “When do student loan payments start?” might be: “They don’t” if you can obtain forgiveness.
Student loan forgiveness means either some or all your repayment obligations disappear.
Borrowers seeking forgiveness need to fill out an application, which can be procured through their lender.
Examples include:
- The Public Loan Forgiveness Program, which you may qualify for if you’re employed by the government or a non-profit organization.
- If you teach full-time for five complete and consecutive academic years in a low-income elementary school, secondary school or educational service agency, you might qualify for forgiveness of up to $17,500 on your direct loan or FFEL Program loans.
- The Nurse Corps Repayment Program covers to 85% of unpaid nursing education debt for registered nurses, advanced practice registered nurses, and nurse faculty.
How to Make Your Student Loan Payments
Make sure you have all of your loan information. If you have a federal loan, you can get all of the details by logging into My Federal Student Aid. If you have a private lender, they will provide you with those details.
After you have all of that information in hand, you can use a student loan payoff calculator or reach out to your servicer to learn your current payoff dates.
You can also sign up for automatic payments to prevent from being late. You may even be rewarded for this as some servicers may offer up to a 0.25 percent interest rate reduction. Being on time with your payment also boosts your credit score.
Pay more than the minimum amount if possible. This can shrink the interest you pay and reduce your total cost of your loan over time. You can get a leg up by using your tax refund money or any extra income to chip away faster at your obligations.
How Long Can You Wait to Start Paying Off Student Loans?
While the typical answer is six months after graduation or dropping below half-time enrollment, deferment or forbearance can delay that. Further details depend on the agreement between you and your lender.
Is It Wise to Wait as Long as You Can to Pay Back Student Loans?
You may hear someone ask, “When do you have to start paying student loans? I’d like to put that off as long as possible.” It’s important they know that the longer they wait to pay back student loans, the more interest will accrue.
It is wise to pay it off as soon as possible.
Refinancing Student Loans
If you decide to refinance your student loans, compare student financing options. By offering all the information in one place, you can get a complete picture of your options. You may find that refinancing makes the most sense for you. Lantern by Sofi offers this important resource.
FAQ
Q: Do you have to start paying student loans off if you take a year off from school?
A: Yes, you will need to begin payments six months after you drop below half-time enrollment.
Q: Do student loans have to be paid back within 10 years?
A: No. Federal loans have repayment plans that range from 10 to 30 years. Most private lenders offer terms of five, seven, 10, and 15 years. Others allow 20 and 25 years.
Q: Are you required to start paying back student loans while in college?
A: No. However, if you have the means and your loans aren't subsidized, you could start paying the interest so it doesn't accrue and get added to your principal when you graduate.