After you graduate or withdraw from your college program, you usually do not have to start paying on your loans right away. The waiting period between the time you leave school and the time you start making payments on your loans is called the “grace period.”
How long is the grace period?
Grace periods are typically six months. If you are in the military on active duty, the grace period can be extended for up to three years. Repayment begins after the grace period is over. You will get a notice from your loan servicer before the grace period ends with information about when your payments will be due.
Are all loans eligible for a grace period?
No. Graduate PLUS and Parent PLUS loans are not eligible for a grace period, but if you have one of these types of PLUS loans you may be able to ask for a deferment for six months after you leave school (Graduate PLUS) or your child leaves school (Parent PLUS). You have to call your loan servicer to ask for this deferment.
Does interest accrue during a grace period?
Yes, depending on the types of loans you have. If you have unsubsidized loans, interest will accrue on your loans during the grace period. Making payments during a grace period is not required, but something to think about if you can afford it because it will help you avoid unnecessary interest capitalization. “Capitalization” is when interest that accrued during the grace period is added to the loan principal when repayment begins.
Can I consolidate my loans during a grace period?
Yes, but once you consolidate, you lose any remaining grace period, and your payments will be due within 60 days of consolidating your loan. Depending on what your student loan goals are, it may be better to wait until your grace period is about to end before you consolidate your loans.