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Updated on Wednesday, May 22, 2019
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? That’s where the grace period for student loans comes in.
Unfortunately, this financial breathing room isn’t always available. 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. Still, even with private debt, some banks and credit unions are kind enough to extend the courtesy of a student loan grace period.
Which student loans have grace periods?
As mentioned, most federal student loans have a standard six-month grace period, with PLUS loans being the exception. (Federal Perkins loans used to come with a standard nine-month grace period, but the program expired in 2017.)
With private student loans, on the other hand, there is no standard grace period. Just as with other loan features, the grace period terms, if any, will vary by lender. 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 to ask.
Note that some private lenders might use another term instead of “grace period,” or they might not use a term at all and simply say that your first loan payment is due a certain number of months after graduation. Either way, though, it would amount to the same thing.
5 private lenders with grace periods for student loans
While your specific private loan agreement will determine whether you have a grace period, there are several lenders that state upfront on their websites that they do offer grace periods on 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 your full (principal + interest) monthly payments, which begin when you enter repayment. Depending on your loan type, full monthly 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 private student loans to pay for a professional degree, such as a law degree, medical degree or MBA, your grace period is nine months long.
For borrowers with more than one loan type, Discover may align your repayment start dates and periods so that they are on the same schedule.
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 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. Still, as with the other lenders on this list, speak with the bank to make absolutely sure when you’re expected to start sending in payments.
3. Sallie Mae
Sallie Mae’s website says that for the Sallie Mae Undergraduate Smart Option Student Loan, “you have six months after you leave school (your grace period) before you begin to make principal and interest payments.”
With this particular loan from Sallie Mae, you should have a six-month grace period before your loans enter repayment. Note that the lender also offers the option of interest-only payments or fixed $25 monthly payments while in school if you want to avoid interest from piling up during that time.
The PNC Solution Loan for undergraduates also has an optional grace period, according to the PNC website.
Specifically, the lenders says, “If you choose to defer payments, repayment begins six months after you graduate.”
Will my loan accrue interest during the grace period?
Bear in mind that you will probably end up adding to the amount you owe during that grace period, due to interest accumulating.
Some federal loans also rack up interest during grace periods (such as unsubsidized direct loans), though a few do not (like subsidized direct loans). But with private student loans, your debt will very likely accrue interest during the grace period.
How can I minimize the impact of interest?
If you want to stop your interest from capitalizing (in which unpaid interest is added to the principal of the loan), you can make interest payments during your grace period.
As mentioned, the private loans from the lenders listed above will likely accrue interest during the grace period. If you’re hoping to save as much as you can on your student debt, however, you can speak with your lender to see what options are available. Usually, small payments during school or while the grace period is in effect can cut down on those interest costs.
Again, speak with your lender to know how interest on your loan will work before signing on the dotted line.
When grace periods are over
It’s important to remember that should you choose to consolidate your student loans, you’d lose any of your remaining grace period. And once you use it up, it’s gone for good. That’s when it’s time to start paying back your loans.
If you aren’t able to get a private loan with a grace period, don’t panic: Repayment may start a little sooner for you than it will for others, but you have a lot of time to prepare for that inevitability. Plus, the faster you start paying back what you borrowed, the faster you’ll pay it off.
Grace periods: overview
- The grace period is the time after leaving school when you don’t need to make payments toward your student loan.
- Grace periods for federal loans tend to last six months. The timing for when you’ll have to start repaying private student loans, however, will depend on your loan terms — there is no standard.
- The terminology that lenders use to describe this buffer before repayment starts might not include the phrase “grace period,” so be sure to read your loan documents carefully to know what’s expected.
- Paying off any accruing interest during your student loan’s grace period will save you money in the long term.