When Do I Have to Start Repaying Student Loans?

Let’s face it: most student don’t spend a lot of time in college thinking about repaying student loans. But when you get closer to graduation or are considering dropping out, student loans start stressing you out. To help relieve the stress, it helps to have a student loan repayment plan. In this article, we’ll walk you through some of the things you need to know about when you have to start repaying student loans so you can start crafting your repayment plan today.

Federal Student Loan Repayment

When to Start Repaying Student Loans

Federal student loans vary by when you have to start paying them off. Students and their parents who have taken out PLUS loans must pay the loan as soon as it has been disbursed, although parents may defer payments while their child is enrolled in school at least half-time. Graduate students who take out PLUS loans may defer payments until six months after graduation. This period of time between when you graduate, drop out or fall below half-time enrollment and when you have to start repaying your student loans is called a grace period. If you have a federal Direct or Stafford loan, you have a six month grace period after graduation, or from the time that you drop below half-time status as a student, before you must begin to repay your loans. For federal Perkins loans, that grace period is extended to nine months. If you choose an income-based repayment or income-contingent repayment plan for your student loans and have no income when the time comes to repay your loans, you may be able to defer payment longer. If you decide to go back to school, go at least half-time and have student loans already, you can defer your payments longer. But remember, interest is accumulating every day you don’t start repaying.

Private Student Loan Repayment

If you have private student loans, your lender determines when you must begin paying the loans back. Some student loan lenders require students to begin paying on the loans as soon as the first amount is disbursed, while other lenders extend six to nine month grace periods after graduating or dropping below half-time status. The specifics of when you must pay back your loan will be written out in the promissory note for your loan. If you cannot locate the promissory note, you can usually find out this information by contacting your lender.

Before you choose to take out private student loans, I highly recommend exhausting your federal financial aid options first. Private student loans do not offer students as many repayment options and can carry higher, variable interest rates. Contact your financial aid counselor to make sure you have exhausted your federal student loan possibilities before applying for private student loans.

Start Paying Loans Early

With most student loans, even though you are not required to begin paying the loan until after you graduate, interest accrues on the loan while you are in school. To stay on top of the balance of your loan, you can begin paying on that interest while you are still in school. If you have a part-time job, set aside a portion of your earnings to make payments on the interest. You may choose to make payments every month, once a year or whenever you feel like you have extra money lying around. Making these payments will give you a head start toward paying off your loans and make your balance a little more manageable when you are required to start paying them back.

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  1. Lammy

    September 8, 2012

    If I take only 4 1/2 units, must I begin repaying the loan? Is there a minimum amount of units I must take? I am NOT requesting another loan this semester.

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