Credible takeaways
- Most federal student loans don't require you to make payments until six months after you leave school.
- Many private lenders allow you to defer payments until six months after leaving school, but be sure to check with your lender to confirm.
- Making payments during school, even if not required, can help you pay off your loans faster and reduce the total interest you'll pay.
You don't always have to start repaying your student loans right away. Most lenders allow you to pause payments while you're still in school and for six months after graduating. But you can also choose to begin paying earlier, even while you're enrolled.
Choosing whether to hold off on payments or to start right away depends on your financial situation. However, making payments while still in school can help you lower the total amount you'll owe after graduation. This can be important, as the average student graduates have about $30,000 in student debt, according to the College Board.
Current private student loan rates
Do I have to pay student loans while in school?
Most student loans don't require you to make payments while you're still in school, but you may have the option to start early if you choose.
For most federal student loans, payments are automatically paused until six months after you graduate, leave school, or drop below half-time enrollment. This grace period gives you time to get financially settled before your payments are due. The only exception is parent PLUS loans, where parents need to request this grace period when they apply.
If you have private student loans, your lender may offer similar options. Some allow you to start paying immediately, while others let you defer payments until you finish school. Private loans often have a grace period, but the terms depend on the lender. You'll usually decide on your repayment plan when you apply for the loan.
“Interest on most student loans starts accruing from the day the funds are disbursed, even while you’re still in school. I recommend making interest-only payments during this time to keep your balance from growing. Otherwise, any unpaid interest will be added to your principal once repayment starts, increasing the total amount you owe.”
— Kelly Larsen, Student Loans Editor, Credible
Understanding your repayment options
Your repayment schedule depends on the type of student loan you have. Here are the different repayment options for both federal and private student loans.
Federal student loan repayment
Each federal loan has its own repayment schedule and options. While you’re not required to make payments on most federal loans until after you leave school, you can choose to start repaying early to reduce the amount of interest you pay overall.
- Direct Subsidized Loans: You won't need to make payments while you're in school. Interest that accrues during this time will be covered by the government, including the first six months after you leave school.
- Direct Unsubsidized Loans: You're not required to make payments while you're in school and for a 6-month grace period after leaving, but interest will still accrue. If you don't pay this interest, it will be added to your loan balance when repayment begins, increasing the total you owe.
- Grad PLUS loans: You don't need to make in-school payments and you'll receive an automatic 6-month grace period after graduating before payments begin. Interest will accrue during this time.
- Parent PLUS loans: You won't be granted an automatic deferment while in school or during the grace period — parents must request a deferment when applying for the loan.
Private student loan repayment
Private student loan lenders typically give you a few different repayment options while you're in school, including deferment. The exact repayment choices will vary by lender.
When you apply for your loan, you'll usually select the repayment option that best fits your financial situation and goals. Each option offers different levels of flexibility, so it's important to understand how they work before deciding.
What are the benefits of in-school repayment?
You may not be required to make student loan payments while you're in school, but there are several financial benefits to starting early:
- Reduce your loan balance: If you make payments before graduation, you'll start chipping away at your loan balance. This means you'll have less to pay off after you finish school.
- Avoid paying more interest: Interest on most loans builds up while you're in school. If left unpaid, it gets added to your loan balance through capitalization, meaning you'll owe interest on top of interest. Making payments can prevent this from happening.
- Save money on interest: The more you pay down your balance, the less interest you'll owe each month. Over time, making payments while in school can lead to significant savings on interest charges.
- Get out of debt faster: Starting payments early puts you on the path to paying off your loans sooner, freeing up your budget for other financial goals after graduation.
- Build good financial habits: Making regular payments while in school helps you get used to budgeting for loan payments, so you're not caught off guard when they become mandatory after graduation.
Tips for managing student loans while in school
Consider the following strategies if you want to start making student loan payments while in school:
- Decide how much to pay: Since you aren't required to make payments, think about how much you can comfortably afford each month. At the very least, try to cover the interest that's building up on your loans. If you can pay more, consider putting extra money toward the principal to reduce your balance faster and shorten the repayment period.
- Adjust your budget: Take a close look at your budget and see where you can make room for student loan payments. If cutting back on expenses isn't possible, you might want to explore part-time work or a flexible side job to generate extra income and keep up with payments.
- Set up automatic payments: Many lenders offer a small interest rate discount if you enroll in automatic payments. Setting this up ensures you don't miss a payment and helps you stay on track with your financial goals.
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FAQ
Do I have to pay student loans if I’m in college?
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Why does my student loan balance keep increasing while I'm in school?
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Are you required to pay subsidized loans while in school?
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What happens to unsubsidized loan interest while I'm in school?
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What are the benefits of in-school student loan payments?
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How can I defer payments on private student loans?
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