When Do You Have To Start Paying Back Student Loans?

The student loan repayment process may have a varied start date, depending on the type of loan you have borrowed. Most federal student loans have a six month grace period in which borrowers are not required to make payments on their student loans.

The terms on private student loans are set by individual lenders, and they may or may not offer grace periods. Some private student loans may require payments as soon as the loan is disbursed. Read on for more details on the intricacies of when you have to start paying student loans.

Federal vs Private Loans: Similarities and Differences

When it comes to repaying your student loans, your first step will be to determine whether you borrowed private student loans or federal student loans (or both). Private student loans are borrowed from a bank, credit union, or another lender. Federal loans are backed by the U.S. Department of Education.

If you’re not sure, you can take a look at the National Student Loan Data System to review information on federal loans. If you took out student loans with a private lender, contact the loan servicer for more information.

When to Start Paying Federal Student Loans

Both Direct Subsidized and Unsubsidized Loans offer a six-month grace period where loan payments are not required after a student graduates.

Recommended: Comparing Subsidized vs. Unsubsidized Student Loans

An important difference though is how the interest accrues. Interest on subsidized loans is covered by the U.S. Department of Education, and that includes during the grace period.

Unsubsidized loans, however, accrue interest as soon as the loan is disbursed (or paid out to the borrower). This includes during the grace period.

When to Start Paying Private Student Loans

Some private student loans operate with a six-month grace period, similarly to federal student loans. However, it’s up to each individual lender to implement a grace period of any kind. If you have a private student loan, check your loan terms to see if you have a grace period.

If you’re looking to take out a private student loan with a grace period, consider reviewing different lenders to see if any terms are comparable to federal student loans. Unlike federal student loans, interest rates for private student loans vary based on individual factors including your credit history. Because of this, your interest rates might be higher than they would be with federal loans.

What Is the Student Loan Grace Period?

As previously mentioned, the grace period is the time you’re given after graduation before you have to start paying back your student loans. The federal government and many private lenders understand that you might not find a steady job straight out of college.

As noted above, both Direct Subsidized and Unsubsidized Loans have a grace period. Direct PLUS loans for graduate students and parents don’t have a grace period. Make sure you understand which loan you have so you can start to make payments on time.

Recommended: Types of Federal Student Loans

While the grace period helps to give you time to find a job before you have to start making payments, it’s important to understand that unsubsidized federal student loans will continue to accrue interest during their grace periods.

At the end of the grace period, the interest is capitalized onto the principal (or original amount borrowed). This becomes the new value of the loan and interest will continue to accrue based on this new value.

Can You Get More Time Before You Start Paying Back Your Student Loans?

If you’ve already graduated and you’re having trouble finding a job in your field, you might be stretching your finances as thin as they go. Even your student loan repayments might not get priority. Before you let late payments get the best of you, consider what options are available to you.

It may be possible to talk to the loan services about delaying your payments a little longer. Your lender doesn’t want you to be late, either, and might be willing to work with you.

Considering an Extended Deferment or Forbearance

Borrowers with federal student loans might qualify for student loan deferment or forbearance, which allows you to temporarily pause payments. Keep in mind that interest may still accrue while your loans are in deferment or forbearance, depending on the type of loan you hold. You’d be responsible for that interest regardless of when you start making your payments.

The start date of those repayments isn’t the only thing you should be concerned with. If you have student loans, lowering your payment amount is probably on your mind as well. Not sure what your monthly payment is? Use our student loan calculator to estimate your student loan payments.

Can You Lower Your Student Loan Payments?

Depending on the types of loans you have, there are a few different methods available that may help you lower your student loan payments.


If you have many different federal student loans, you might want to consider student loan consolidation. Consolidating your existing loans with a Direct Consolidation Loan means combining all of your federal loans into a single loan and potentially lengthening the term so your payments go down. A longer term, however, means paying more interest over the (now longer) life of your loan.

And the new interest rate is the weighted average of all your federal loans combined, rounded up to the nearest eighth of 1%, which means consolidation might not lower your interest rate.


Refinancing your student loans is similar to consolidation, but instead of combining your loans into one new one with an average interest rate and longer term, the interest rate on a refinanced loan is determined by factors including the borrower’s credit history. Ideally, refinancing will lead to a lower interest rate. It’s important to note that refinancing student loans forfeits them from protections that come with federal student loans like forbearance during times of economic hardship.

It’s also, usually, possible to lengthen or shorten your loan term. Refinancing can be done with private student loans, federal student loans, or both. And, as mentioned above, lengthening the loan term may result in an increased amount of accrued interest over the life of the loan.

Income-Driven Repayment Plans

If you have federal student loans and have a lower income, you might want to look into Income-Driven Repayment plans. There are a few different IDR options that vary based on your income and household needs, like how many family members you care for.

All IDR plans forgive the remaining balance on your loans either 20 or 25 years after you begin paying the loan back. This could be an option to consider if you are a recent grad. Note that while the remaining balance is forgiven at the end of an IDR loan term, that amount may be considered taxable income by the IRS.

What Happens If You Don’t Start Paying Back Student Loans?

If you don’t start paying back your student loans, you may face some pretty serious financial consequences. Your loan will become delinquent after the first day of missed payments. Once you’re 90 days late making a payment on your federal loans, your loan servicer will report the delinquency to the credit reporting bureaus and your credit score will take a hit.

If you have a private student loan, your lender may report you to the credit reporting bureaus after just 30 days. A lower credit score may make it more difficult to secure credit and loans in the future, and if you do get a loan, it might come with less favorable terms and a higher interest rate.

Student Loan Default

After 270 days, your federal loans will enter default. Private loans may default after 120 days and Federal Perkins loans can enter default immediately after you miss a payment.

Once you’re in default, your credit will take another hit. You might also be subject to having your wages garnished (though the rules on this are different when it comes to federal vs private student loans).

In addition to wage garnishment and damage to your credit, you may also experience the following negative consequences:

•   Late fees. For example, federal loans that are 30 days late may encounter late fees of 6% of the amount due.

•   Loss of eligibility for loan deferment or forbearance once you default on federal loans.

•   No longer able to choose your repayment plan for federal loans.

•   The government may withhold your tax refund if you fail to pay federal loans.

•   Loss of eligibility for financial aid.

The Takeaway

In general, student loans give you some time after you graduate to get your career and finances in order. A traditional federal student loan grace period is typically six months. It’s important to know when you’re expected to start repaying your loans, and what your options are in terms of lowering your interest rate or monthly payment.