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Do I need to start paying back my loans during college?

December 06, 2018

If you have received a student loan, or several, to finance your education, then you may be wondering when you need to begin paying the loans back.  The good news is that, as long as you are enrolled at least half-time (generally, this means completing 6+ credit hours per semester), then you do not need to start repaying the loans until six months after graduation.  Repayment requirements can vary, depending on whether the loan is issued by the federal government or a private lender. Before you sign on the dotted line, make sure that you clearly understand when you need to begin paying your loans back.


Repaying Your Federal Student Loans

Student loans issued by the U.S. federal government do not require repayment while you are still enrolled in school at least half-time.  In addition, you will be granted a grace period of approximately six months following graduation. After six months, during which time it is assumed that you will have found employment suited to your degree, you are required to begin repaying your loans.  However, if you opt for a Direct Consolidation Loan to simplify your monthly loan payments, then you by default waive your right to any remaining portion of the grace period.  

  • Pro tip: You have the option to indicate on the Direct Consolidation Loan application that you want the loan servicer to delay consolidation of your loans until near the end of your grace period.  


There is always an exception to the rule.  Unlike other federal loans, Direct PLUS loans issued to parents require repayment to begin as soon as the loan is fully disbursed.  However, parents may request deferment while the student is still in school and for the customary six-month grace period following graduation.  For schools that require parents to apply for Direct PLUS loans via StudentLoans.gov, the parent applicants have the option to request repayment deferment during the initial application process.


Repaying Your Private Student Loans

Unlike with federal student loans, the repayment schedules for private students loans are not standardized.  Many private lenders, although not all, choose to require repayment to begin on the same schedule as that of federal loans.  Therefore, while not guaranteed, it is more than likely that repayment for your private student loans can be deferred until six months after graduation, with interest accruing from the date of disbursement.


Interest Accrual During Deferment Periods

Just because you are not required to repay your student loans while you are still in school, that does not mean you shouldn’t do so if you can.  Unless your loans are subsidized federal loans, it is important to realize that your outstanding debt is accruing interest - every single day - while you complete your studies and during the six-month grace period afterward.  At the end of the grace period, the entirety of this accrued interest is added to the principal amount that you owe.  As a result, you will be paying interest on interest, in addition to interest on the principal amount that you actually borrowed.  Yuck! Therefore, if you can afford to begin repaying your loans earlier than is required, you definitely should. Your future self will be grateful that you did!