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Updated on Thursday, April 29, 2021
When you borrow a student loan, you’re usually not expected to start paying it back right away. Instead, most lenders let you pay your student loans after graduation. In fact, most student loans come with a grace period that lasts while you’re enrolled in school and for six months after you graduate.
While all federal student loans come with this grace period, private student loan terms can vary by lender. Most will extend the courtesy of a student loan grace period, but it’s worth checking your loan agreement to know when payments are due.
Student loans that let you pay after graduation
Most federal student loans have a standard six-month grace period. This includes subsidized and unsubsidized direct loans, as well as grad PLUS loans. Note that parent PLUS loans don’t automatically come with a grace period, but parent borrowers can request a deferment of payments while their child is in school. (Federal Perkins loans also used to come with an even longer grace period of nine months, but that 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.
8 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:
1. Discover Student Loans
Discover’s website says: “Most Discover student loans provide you with a grace period — a period of time when you are not required to make monthly payments. Depending on your loan type, payments may not be due until 6 or 9 months after you graduate or when 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.
2. Citizens Bank (RI)
The Citizens Bank website states the following:
“The Citizens Bank Student Loan offers deferred payments until 6 months after graduation or when the student drops below half-time status.”
Citizens Bank calls this time period “deferred payments,” rather than a grace period. To make sure you don’t have to pay student loans until after graduation, make sure to double-check with the bank about its policy.
3. Sallie Mae Bank
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 to stop interest from piling up during that time.
4. PNC Bank
The PNC Solution Loan for undergraduates also has an optional grace period, according to the PNC website.
Specifically, the lender says, “For deferred payments, repayment begins six months after you graduate or cease to be enrolled in school at least on a half-time basis.”
5. College Ave
If you elect for a student loan from College Ave, you have four repayment options: full repayment, interest-only payments, flat payments of $25 per month or deferred repayment.
Says College Ave, “After you are no longer in school at least half time — because you’ve graduated, left school or dropped below half-time enrollment — you have a grace period before you begin making full principal and interest monthly payments. The grace period is six months for College Ave undergraduate loans and nine months for most graduate loans.”
Along with student loan refinancing options, SoFi also lends undergraduate and graduate student loans. For both loan types, you can choose whether to make small or full payments right away or defer payments while you’re in school and for six months after you graduate.
However, parent borrowers who borrow parent loans from SoFi don’t have a grace period. They’ll need to make interest-only payments while their child is in school or full payments right away.
CommonBond offers undergraduate, graduate, dental, MBA and medical student loans. All of these student loans come with a six-month grace period. Note that the grace period on CommonBond MBA loans might vary depending on the repayment term you choose and your anticipated graduation date.
Online lender Earnest offers one of the longest grace periods with the option of a nine-month grace period on both its undergraduate and graduate student loans. As long as you don’t elect its “principal and interest repayment plan” during school, you could push off repaying your Earnest loans until nine months after you graduate.
Although you might appreciate this extra breathing room as you search for a job, note that your loans will get more expensive the longer you wait to start paying them back.
Student loans which accrue interest during the grace period
While the grace period gives you some breathing room before you have to worry about student loan repayment, it does come with a downside: Interest might be accumulating on your debt the entire time.
The only loans that don’t accrue interest during the grace period or other periods of deferment are federal subsidized direct loans, which are available to students with financial need.
But unsubsidized direct loans, PLUS loans and private student loans all start accruing interest right away. This means that your balance will quietly grow if you choose not to pay your student loans until after graduation.
How to minimize the impact of interest
If you want to stop your interest from accruing and then capitalizing (or being added onto your principal loan amount), you can elect to make interest payments during your grace period.
If you’re hoping to save as much as you can on your student debt, speak with your lender about making payments during your grace period. Even small payments during school (say, $25 per month) can cut down on those interest costs.
If you can afford to start paying your student loans before graduation, perhaps with income from a part-time job, you could prevent your loan balance from becoming overwhelming after graduation.
When grace periods end
It’s important to remember that should you choose to refinance 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: Final overview
- The grace period is the time during and after leaving school when you don’t need to make payments toward your student loan. It’s usually in effect while you’re enrolled at least half time and for six months after you graduate or drop below half-time enrollment.
- Although many private lenders offer a grace period, the timing for when you’ll have to start repaying private student loans 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.
- Interest starts accruing on private student loans right away, so your balance at the end of your grace period could be bigger than the amount you initially borrowed.
- Making small or interest-only payments while you’re in school can keep your loan balance from ballooning and save you money in the long run.
Rebecca Safier contributed to this report.