What is a student loan grace period? How it works

By Victoria Holliday | Published on November 19, 2025

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Wondering when you need to start paying back your student loans after you graduate? Enter the grace period: a breather between school’s end and your loan repayment duties. The period of time between when you graduate, leave school, or fall below half-time enrollment and need to begin payments on your student loans is known as the student loan grace period.

This period of time is a temporary delay of your required loan payment obligations. This grace period gives you time to get financially settled into life after school and begin making a financial plan to pay off your student loans.

How long is the student loan grace period?

The duration of the student loan grace period varies. Typically, for federal student loans, it spans six months. However, it is important to note that some loans may vary. For example, Federal parent PLUS loans are the only type of federal loan that does not have a grace period. If you have private student loans¹, the grace period depends on the lender. Earnest offers a 9 month grace period².

Should You Make Payments During the Grace Period?

Should you make payments while in the grace period? It depends. If you have the financial ability to do so, making payments during the grace period can help you potentially save money over the life of your loan. With federal loans, interest accrues but doesn’t compound. Depending on the type of loan you have, interest may still accrue during the grace period. For most federal loans, interest will accrue during your grace period and be added to the outstanding balance of your loan, but this interest will not be capitalized.

Translation? What does that mean in simple terms? Unpaid interest may increase your monthly payment amount under fixed repayment plans. So making payments during the grace period can help you avoid interest capitalization and save money overall.

Additionally, factoring your student loan payments into your budget right away, won’t leave you totally caught off guard & struggling to budget once the grace period ends. The best approach is to assess your finances to decide your best strategy to prioritize paying off your debt.

Can you extend your student loan grace period?

Depending on your circumstances you may be eligible to extend the grace period beyond the usual 6 month student loan grace period. If you’re in the military and serve more than 30 days of active duty before your grace period ends, then your grace period will begin when you return from active duty service. Another factor that may affect your grace period is if you re-enroll in school at a half-time capacity before the grace period ends. Should that occur, you’ll have access to a full grace period once you leave, graduate or drop below part-time status.

If you cannot extend the grace period and can’t afford your full monthly payments, other repayment plans like Income Driven Repayment Plans (IDR) may be an option. Know your repayment plan options before your grace period ends so you can prepare. You may also be eligible for deferment or forbearance.

How to prepare to pay your student loans

While the grace period helps buy you time to adjust and plan your financial journey ahead, it is important to be prepared to pay back your loan.

The first step is knowing how much to owe and to who. Set aside time to build a list of your student loans. Make sure to note whether they’re private or federal, your monthly payment and due dates, the current and principal balances, the interest rates, and who the servicer is.

Know your full financial situation and budget to be able to assess if your student loan payments fit into your budget.

The student loan grace period serves as a valuable transition period, offering breathing space for students to adjust to post-school life and plan their financial strategies. And while those months offer valuable temporary relief, it’s important to use this time wisely, whether by making payments during the grace period, and preparing for repayments. By making the most of the grace period, borrowers will be able to start off their repayment journey with confidence and financial readiness.

About the Author

Victoria Holliday

Victoria is the Head of Content at Earnest. She brings extensive ed-tech expertise from six years at Chegg, where she developed educational resources reaching over 20 million students nationwide.

With a Master’s in Political Science and experience in public policy from several California campaigns, she’s passionate about creating accessible content that enhances student outcomes in the dynamic world of higher education.

Disclaimer

This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

1 As was announced by the U.S. Department of Education (ED), federal student loans have resumed accruing interest starting September 1, 2023, and federal student loan payments were reinstated starting in October. Please note that you may lose benefits associated with your underlying federal loans, such as federal Income-driven Repayment Plans (an example of which is the SAVE plan), Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options, if you refinance into a private loan. If you file for bankruptcy, you may still be required to pay back this loan. See https://studentaid.gov for more information.

2 Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.