Do You Have To Pay Student Loans While in School? (2025 Guide)

In the 2023-24 school year, students and parents took out $99 billion in federal and nonfederal student loans, according to the College Board. But when do you need to start factoring those payments into your budget? Do student loan payments exist alongside study sessions and exams, or can you wait until you’ve left school to start working on repayment?

Whether or not you have to make student loan payments while you’re in school depends on your loan type. Here’s what you need to know about repayment obligations while enrolled and why you may want to make payments even if they’re not required. 

Current private student loan rates

Are student loan payments required while you’re in school?

Your student loan type and your loan agreement will determine whether or not you need to make payments while you’re enrolled in school. 

Federal student loans

Most federal student loans, including Direct Subsidized and Unsubsidized Loans, offer in-school deferment to students enrolled at least half-time. Repayment begins six months after you graduate or leave school.  

Direct PLUS Loans, available to graduate students and parents of dependent undergraduate students, can be repaid as soon as the full loan amount is disbursed. However, parents have the option to request an in-school deferment, allowing them to delay repayment until six months after the student graduates, reduces their enrollment to less than half-time, or exits the program altogether. 

Private student loans

Private student loan repayment terms can vary by both lender and product. In some cases, you may be able to defer repayment while you’re in school or make interest-only repayments once the loan is disbursed. In others, you may be responsible for making full payments after the loan is disbursed. Always review your loan agreement carefully to understand when you must begin repayment.

What happens to loan interest while you're in school?

Your student loans will usually begin accruing interest upon disbursement, regardless of your enrollment status or loan type. That’s not always clear to new borrowers, and depending on the type of loan you have, that can lead to substantial costs. 

“The most significant, and potentially costly, misconception that students have about their student loans, deferment, and interest accrual while in school is the idea that because they aren’t required to make payments, nothing is happening to their loan balance,” says Megan Walter, senior policy analyst at the National Association of Student Financial Aid Administrators (NASFAA). 

Keep Reading: What Increases Your Total Loan Balance? How Your Student Debt Can Grow

If you have subsidized federal student loans, the government covers interest while you’re in school at least half-time, during your grace period, and during periods of deferment. Once you graduate or leave school and your grace period ends, you’ll be responsible for newly accrued interest. 

Interest starts accruing immediately for unsubsidized federal loans and most private student loans, regardless of your enrollment status. The government (or private lender) won’t cover that interest, so it’s your responsibility as soon as it begins to accrue. 

If you have a private loan, you may be required to make full or interest-only payments as soon as the loan is disbursed. Even if you aren’t required to make any payments, covering the interest during this time can prevent interest accrual and reduce the total cost of your loan. 

If you don’t pay the accrued interest, it can capitalize — another important factor that student borrowers aren’t always aware of, according to Walter. 

“There is also a lack of education around capitalized interest and what that means,” she says. “Many students don't understand or know that the interest that accrues during their time in school will be added to their principal loan balance upon the end of their grace period.” That can significantly increase the total cost of your loan. 

Check Out: How To Calculate Interest on Student Loans

When do student loan payments officially begin?

Most federal student loans have a six-month grace period after you graduate, withdraw, or drop below half-time enrollment. You won’t be required to pay during this time, but interest will still accrue if you have a federal unsubsidized loan. 

Private student loan repayment terms can vary by lender, though many offer a grace period option for certain loans or repayment plans. 

Earnest, for example, provides grace periods of up to nine months on some loan products. College Ave offers undergraduate loans with a six-month grace period, while loans for specific programs, like law, dental, or medical school, can range from nine to 36 months.  

Can you start repaying your loans early while in school?

You can typically begin repaying your student loans while you’re still enrolled, and if you have the means to do so, that may be a wise financial decision. 

“Even when not required, making small student loan payments while in school offers significant financial benefits,” says Bruce McClary, senior vice president of membership and communications at the National Foundation for Credit Counseling (NFCC).

“It helps reduce the amount of interest that accrues, which lowers the total cost of the loan and ensures a smaller debt balance upon graduation,” he explains.

Walter agrees, noting that students “can log in to their servicer account once they know the servicer and make ad hoc payments toward their balance.” Like McClary, she explains that doing so “helps in the long term, as they'll be reducing the amount of interest that accrues on their balance, which can also reduce how long it will take them to pay back their loan, depending on how much they can pay during their time in school.”

Even small monthly payments while in school can make a big difference over the life of your loan. But before you start making payments, contact your servicer to ask about any potential negative consequences of early repayment. 

“It’s essential to check whether there are any prepayment penalties or restrictions,” warns Walter. “Borrowers should understand if they can pay off the loan early without incurring fees and if there are any conditions under which prepayment is allowed or restricted.”

How can you manage student loans while in school?

Avoiding your student loan repayment obligations may seem tempting, especially if repayment doesn’t begin until your academic journey ends. But student loan payments can be an expensive thing to brush off.

There are several steps you can take while in school to make repayment easier and avoid unnecessary costs down the line. 

Pay interest monthly 

Even if you’re not required to make full loan payments while in school, you can still choose to pay the interest accruing on any federal unsubsidized, PLUS, or private loans. Making payments on your loan can reduce the total cost of the loan and lighten your debt obligation after graduation.

McClary notes that making early payments “also helps build a positive credit history and makes it easier to adjust to making full monthly payments after securing a job.” 

Set up autopay

Setting up automatic payments, even just for monthly interest, can help you make consistent payments and, if you’re already in active repayment, help you avoid missed payments. Many private lenders offer interest rate discounts — often around 0.25 percentage points — for borrowers enrolled in autopay. Even a small discount can turn into thousands of dollars over the term of the loan, especially if you have a longer term and/or a higher interest rate. 

Create a budget

Making a budget is always a good idea, but it becomes even more beneficial when student loan payments are involved. A budget can help you stay on track and identify any opportunities to redirect funds to student loans now, reducing your burden after graduation.

McClary recommends that student borrowers on a limited budget “integrate their student loan payments into their budget by tracking expenses and allocating any available funds toward their loans.”

Use financial aid refunds wisely

If you receive financial aid refunds from excess aid, think carefully before spending the money. Rather than using it on nonessentials, consider putting some or all of it toward interest payments or your loan principal. Reducing your loan balance early can lower your future monthly payments and total interest paid over the loan term. 

Talk to your student loan servicer

Your relationship with your servicer shouldn’t end after you apply for student loans and accept the funds. They are often your best resource for understanding your repayment options and responsibilities.

At a minimum, contact your loan servicer to confirm repayment terms (including grace periods) and that they have your most recent contact information. Doing so can reduce the chance of unwanted surprises down the road.

Walter also recommends that students check “if the payments are simply reducing the interest accrual or if they go toward the overall loan balance,” adding that other important factors to consider include the structure of the repayment schedule and whether payments are fixed or variable.