When Do I Have To Start Paying My Student Loans?

In most cases, you’ll need to start paying off your student loans six months after you leave school, or drop below half-time student status. However, as all loans differ, you should make sure to read and comply with your loan’s terms.

The Six-Month Student Loan Repayment Grace Period

Many student loans have a six-month grace period, including direct subsidized/unsubsidized loans, subsidized/unsubsidized federal Stafford loans, and some private student loans.

The grace period for these loans ends six months after you graduate, drop out of college, or start taking fewer classes than a half-time student.

Unlike Direct loans, the Perkins loan carries a nine-month grace period. PLUS loans do not have a grace period, and repayment needs to begin within sixty days of the final disbursement.

The grace period is designed to give individuals a chance to find employment and get their financial affairs in order before repaying their student loans.

Exit Counseling

Students who take out federal loans for college are required by federal law to complete exit counseling at their school’s financial aid office upon graduation, if they endeavor to leave school, or if they drop below a half-time course load. The meeting is designed to ensure students understand all their loan repayment options and rights.

Exit counseling takes approximately half an hour. During the session, you will be given a loan repayment schedule.

Private Loan Repayment

Private student loans do not offer standardized repayment schedules. You and your lender will have to agree to terms prior to signing the loan agreement. While many banking institutions will adhere to the same six to nine-month grace period that the government uses, such decisions are at the lender’s discretion.

Grace Period Exceptions

There are several situations that can change the grace period on your student loan. If you are called to active military duty service for more than 30 days before your grace period ends, you will be eligible for an additional six months. The six-month period begins when you return from active duty.

You will also be granted an exception if you drop below half-time in school but re-enrolled to full-time status. When you re-enroll, the six-month grace period starts over.

The third circumstance that affects your loan grace period is consolidation. If you consolidate your loan at any point during the grace period, you will forfeit the remainder of the time and start repaying the loan within a few months of disbursement.

What Should I Do During the Grace Period?

The grace period gives you time to get your finances in order before you start repaying your student loan.

Finding work should be your first priority. An income is essential for making your loan repayments regularly.

The grace period also gives you time to research your repayment options and decide which one will work best for you. You may also like to consolidate your student loans during the grace period to avoid multiple repayment bills.

What Happens If I Don’t Start Paying Back My Student Loan?

Making student loan payments when they’re due is crucial for your financial future. If you don’t make payments on time, you’ll receive a late fee or penalty. Late payments will negatively impact your credit score.

Your loan is considered delinquent once repayment is one day late. After 90 days, your loan servicer will report your delinquency to the major credit bureaus.

If you are 270 days late with your loan payments, your loan will be in default.

Defaulting on your student loan carries serious consequences. The U.S. government can take up to 15 percent of your wages and Social Security benefits to recoup the debt. They can also claim any tax refunds you have due. Repaying your debt is also made much harder because the government can deduct a quarter of your payments in collection fees. This makes your student loan much more expensive than it was originally.

If you cannot start making payments on time, or you feel you won’t be able to make a payment in the future, speak to your loan servicer to discuss your payment options.