For most federal student loans the answer is six months after you graduate, withdraw, or drop below half-time enrolment. That window is called the grace period, and it exists so you can find work before the first bill lands.
It is also the most useful six months you will ever get with these loans, and most people spend it doing nothing.
The timeline
- Month 0. You graduate or drop below half time. The clock starts.
- Months 1 to 5. No payment is due. On unsubsidised loans, interest is accruing the entire time.
- Month 6. Grace period ends. Accrued interest capitalises into your principal. Your first payment comes due.
Which loans get a grace period
Direct Subsidised and Unsubsidised loans get the standard six months. On subsidised loans the government covers interest during it. On unsubsidised loans it does not, and that interest capitalises at the end.
PLUS loans work differently and generally enter repayment as soon as they are fully disbursed, though deferment may be available.
Private loans follow whatever your promissory note says. Some offer six months, some nine, some none at all. Read the note rather than assuming.
Grace is once per loan, not per event. If you use your six months, return to school, then leave again, you generally do not get a second grace period on the same loans. Going back for a graduate degree is the common exception, since enrolment triggers in-school deferment instead.
The five things to do inside the window
- Find every loan you have. Federal loans are all listed in the Department of Education's federal student aid database. Private loans are not, so check your credit report for those.
- Update your contact details with the servicer. Servicers change hands regularly. Mail going to a college address is one of the most common ways people accidentally go delinquent.
- Choose your repayment plan deliberately. If you do nothing you get placed on a default plan chosen by a system that knows nothing about your income or your other debts.
- Make interest-only payments if you can. Anything you pay now is interest that never capitalises. This is the highest-value use of the grace period.
- Check for employer repayment assistance. It is far more common than it used to be, and nobody will offer it to you unprompted.
What happens if you miss the first payment
A federal loan is considered delinquent the day after a missed payment, and delinquency is typically reported to the credit bureaus at 90 days. Default comes much later, at 270 days, and carries serious consequences including wage garnishment and loss of eligibility for future aid.
None of that is automatic or unavoidable. Servicers have deferment, forbearance and income-driven options, and every one of them is better than silence. The worst outcome comes from not opening the mail.
The short version
- Six months for most federal loans, starting when you drop below half time.
- Unsubsidised interest accrues the whole time and capitalises at the end.
- Update your servicer contact details before the window closes.
- Pick a repayment plan yourself instead of accepting the default.
Common questions
Is the student loan grace period six months for everyone?
For most Direct Subsidised and Unsubsidised loans, yes. PLUS loans usually have none, and private loans follow their own promissory note, which may differ.
Does interest accrue during the grace period?
On unsubsidised and most private loans, yes, and it capitalises into principal when the grace period ends. On subsidised loans the government covers it.
Can I start paying before the grace period ends?
Yes, and it is the best use of the window. Every dollar paid now goes against interest that would otherwise become permanent principal.