Making Private Student Loan Payments While in School

By Scarlett Li | Published on February 23, 2026

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The cost of college has never been higher. For many students, taking out student loans can help make the college dream reality. However, borrowing money doesn’t just open doors; it also comes with its own challenges — including figuring out the right repayment strategy.

The idea of making payments towards student loans before you are required to might be the last thing you want to do. However, making even a small monthly payment while you’re in school could help you save money in the long run. It could also reduce your monthly bill once you graduate. Here’s how it works.

What happens when you put off repayment

Many students wait until after their post-graduation grace period ends to begin repayment. Let’s use an example to illustrate what that might look like.

Say you decided to take out a $12,000 private loan to help cover the cost of your first year of college. The loan has a fixed interest rate of 6.6% and a term of 10 years. If no payments are made until after the end of the loan’s grace period — i.e., 4.5 years after you first take out the loan — your total loan balance after your grace period ends will be $21,664. The monthly payment would be $181. Please see the example below using Earnest’s Student Loan Calculator.

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The reason for the extra cost? While you’re in school, your interest doesn’t just rack up month after month. It also capitalizes, or gets tacked onto your student loan balance, after your grace period ends. If that happens, you’ll have to pay interest on your interest as well on your original principal amount.

Capitalization can happen for both private loans and federal loans, including Unsubsidized Loans and Parent PLUS Loans. These types of loans will start to accrue interest on the principal balance right away, even if payments aren’t due yet. The only exception is federal Subsidized Loans. Subsidized Loans don’t accrue interest as long as you’re in a grace period, in a period of deferment, or enrolled at least half-time.

If you aren’t sure what you borrowed, contact your student loan servicer, log into your account on the U.S. Department of Education website, or reach out to your financial aid office.

It is important to also note here that not every student loan has the same six-month grace period. Earnest student loans, for example, have a nine-month grace period after graduation before borrowers have to start making payments.

What happens when you start paying student loans while in school

Technically, you don’t have to start making student loan payments until after your grace period ends. But what if you did? Let’s keep using the example above — the $12,000 loan with the 10-year payment term at a 6.6% fixed interest rate. Say you set aside $25 per month to make loan payments while in school. This might not seem like much, but by the time you graduate, the total cost of the loan would be $21,129 — rather than $21,664. That would save you $535 in interest charges while you’re in school. That $535 also won’t capitalize, in turn saving you more money over the life of the loan.

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Of course, this example just features a very small monthly payment you make while in school. Here’s what happens if you decide to pay the whole amount of your monthly interest — or even make full payments while you’re in school.

Making student loan interest payments while in school

Looking to make a bigger dent in repaying that total loan cost? You could plan to pay off the interest as it accrues each month. In this same example, that’s $66 per month. This would save you $5,240 in interest over your college career versus making no payments at all before the end of your grace period. It would also keep that $5,240 from capitalizing and the total cost would be $16,424. As a result, your post-graduation loan balance would be $12,000 — the same amount you borrowed initially, without any extra tacked-on interest.

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This strategy is especially handy if you have private student loans or Unsubsidized federal student loans that rack up accrued interest while you’re in school. If you can afford to make interest payments during college, you could save big in the long run.

Making both principal and interest payments while In school

It can be tough for students to chip away at their loans while maintaining full-time enrollment. But if you can afford to make payments early, you could be in for some serious savings. Let’s go back to our example. For this loan, a full interest-plus-principal payment would equate to approximately $137 per month. If you do this every month you’re in school and during your grace period, your balance would be less by the time you begin repayment, with a total cost of $16,424.

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How to pick the right student loan repayment plan

Each student’s financial situation is different, and you’ll need to weigh the pros and cons of making payments while in school before you settle on a strategy. If you currently have the savings or income to commit to extra payments while you’re enrolled, it might be worth budgeting to begin repayment as soon as possible. Also consider taking on a part-time job while you’re in school, and using that cash to make your payments. It could help you save thousands of dollars over the life of your loan.

Conversely, if early payments are going to cause you undue financial stress, you may want to wait until after your grace period ends. At that point, you’ll have a few more tools available to you, too. If you have federal loans, you’ll be able to choose from a variety of repayment options, some of which will cap your monthly payments at a percentage of your discretionary income.

And if you’re a private student loan borrower, you can always refinance to reduce your interest rate after you get your first job and begin to build your credit.

Maximize your financial aid before borrowing

Before making any decisions about how you will borrow and repay your student loans, make sure you have filled out the Free Application for Federal Student Aid (FAFSA) and have explored your scholarship and grant options. These alternatives to taking on student loan debt are important for college students to maximize. Unlike a loan, scholarships and aid are free money you don’t have to pay back.

Consider refinancing with Earnest

No matter what repayment strategy you decide to take during in school, you’ll still have to reckon with full payments after you graduate. The good news is that there are ways to make that transition easier. One of those ways is through refinancing.

If you meet your refinance lender’s requirements, you might qualify for a lower interest rate on your student loan debt. That could reduce your monthly payments, streamline the repayment process, and save you money over the life of the loan.