Graduating college, trying to get a job and figuring out how to navigate adulthood feels overwhelming enough; who wants to throw in making student loan payments? Unfortunately, within six months of graduating college it’s time to start paying back your lenders. It’s common for federal student loans to come with a six-month grace period, but private lenders are not required to offer this buffer time for you to get it together before paying down thousands of dollars in debt. Some, however, are kind enough to extend the courtesy of a grace period.
Which student loans have grace periods?
Most federal loans have a standard six-month grace period (PLUS loans being the exception), and Perkins loans have a standard nine-month grace period.
With private loans, there is no standard grace period because each private loan is specifically governed by the controlling loan document between the lender and the borrower. You will need to read your specific loan documents to know whether your private loan has a grace period. Or you can call your lender directly and ask.
Private loans that do have grace periods may use the term “interim period” instead of “grace period”, but it’s the same thing (i.e. the time between when you graduate school and when you have to start repaying your loans). Some private lenders may not use a term at all – they may simply say that your loan is due a number of months after graduation.
6 Private loans with a grace period
While your specific private loan agreement will determine whether you have a grace period, there are several lenders that state on their websites that they do offer grace periods in connection with their private student loans.
Discover’s website says:
All Discover Student Loans provide you with a grace period – a period of time when you are not required to make payments. Depending on your loan type, payments are not due until 6 or 9 months after you graduate or your enrollment status drops below half time.
With Discover, if you have an undergraduate private loan, your grace period is six months long. For professional degree private student loans (e.g. law, medical, MBA, etc.) your grace period is nine months long.
If you drop below half-time enrollment, you would also have a grace period of six to nine months (depending on the loan) during which you would not be required to your student loan payments.
The Citibank website states:
Many Citi loans provide a grace period – a period of time when you are not required to make student loan payments. It starts when you graduate, leave school, or drop your attendance below half time.
Citibank’s website reads almost identically to Discover – it provides a six month grace period of undergraduate private student loans and a nine month grace period for professional degree private student loans. The grace period also begins if your enrollment drops below half-time status.
3. Wells Fargo
Wells Fargo’s website isn’t as clear about grace periods. The Wells Fargo website says:
With most Wells Fargo private student education loans, you start making payments six months after you graduate or leave school, although for some loans like the Wells Fargo Student Loan for Parents and the Wells Fargo Private Consolidation? loan, payments begin once the loan funds have been received.
This is a situation where you want to be very careful reading your loan documents to determine if your private student loan from Wells Fargo does include the six-month grace period. From this statement, it seems like the standard private loan would get a six-month grace period, but it’s not completely clear. For this reason, but sure to ask your lender and read your loan documents.
4. Citizens Bank
The Citizens Bank website states the following:
With our Citizens Bank Student Loan… No principal or interest is due while you are still enrolled at least half-time. Payment begins 6 months after graduation.
Citizens Bank (like Wells Fargo) does not call this period between graduation and repayment a “grace period”, but the website does say that payment begins after a six-month period. Again, this applies to the Citizens Bank Student Loan, so you want to be careful to read your loan documents to see which private loan you have from Citizens Bank and when, in fact, your repayment period begins. Based on this sentence, when you drop below half time and graduate from college, you will have six months before your student loan payments are due.
5. Sallie Mae
The Sallie Mae website says that for the Sallie Mae Undergraduate Smart Option Student Loan® “(p)rincipal and interest payments begin six months after you leave school for all repayment options.” With this particular loan from Sallie Mae, you should have a six month grace period before your loans enter repayment.
The PNC Solution Loan, for undergraduates, graduates, and professionals, has a six month grace period, according it the PNC website. Payments, if deferred during school, will not begin to be due until six months after you graduate.
Will my loan accrue interest during the grace period?
Some loans accrue interest during grace periods, while others do not. Subsidized federal loans will not accrue interest during the grace period. Unsubsidized federal loans and private student loans will accrue interest during the grace period.
How can I minimize the impact of interest?
If you want to avoid your interest from capitalizing, you can make interest payments during your grace period.
The private loans from the lenders listed above, generally, will accrue interest during the grace period. Again, this is a generalization. Your loan documents will govern your specific loan, so be sure to read your agreement and talk with your lender being signing on the dotted line.