Student Loan Grace Period: What Happens Between Graduation and First Payment

How Long the Grace Period Lasts

Direct Subsidized and Direct Unsubsidized Loans both come with a standard 6-month grace period once you graduate, leave school, or drop below half-time enrollment, confirmed on Federal Student Aid's help center . Your first payment comes due roughly six months after your last day of at least half-time enrollment, not six months after your official graduation date if you drop below half-time earlier. Your servicer sends a notice ahead of that first due date with your monthly payment amount and repayment plan options.

What Happens to Interest During the Grace Period

Subsidized loans, awarded based on financial need, do not accrue interest during the grace period, the government covers it for you. Unsubsidized loans keep accruing interest from the day the funds disburse straight through the grace period, since eligibility for these loans does not depend on need. If you do not pay that accrued interest before repayment starts, it capitalizes, meaning it gets added to your principal balance, and you pay interest on that larger amount going forward.

Paying the accrued interest during your grace period, even in small amounts, keeps your principal balance from growing before you make a single scheduled payment. Log into your servicer's account and make an interest-only payment any time during the six months, there is no requirement to wait for your first bill.

Loans Without an Automatic Grace Period

Grad PLUS and Parent PLUS Loans do not come with a built-in grace period. Repayment on a PLUS loan can begin as soon as the loan fully disburses unless the borrower requests a deferment while the student is enrolled. Check with your servicer directly about a PLUS loan's repayment start date rather than assuming the same six months that applies to Direct Subsidized and Unsubsidized Loans. Ask your servicer in writing for an in-school deferment on a PLUS loan if you want payments paused until after you leave school, since PLUS loans do not pause on their own. Interest still accrues on a PLUS loan during any deferment period, so paying it as it builds keeps your balance from growing before repayment even starts.

How Your First Payment Amount Is Set

If you do not actively choose a repayment plan, your servicer defaults you into the Standard Repayment Plan, a fixed monthly payment spread over 10 years. Other options include income-driven plans that base your payment on what you earn, and the Repayment Assistance Plan that replaced the SAVE plan under the 2025 federal loan overhaul. Compare the total interest paid and the monthly payment amount across plans before your grace period ends, switching plans later is possible, but picking correctly from the start avoids extra paperwork. Your servicer's portal displays your exact first due date once it is set, log in during your grace period to confirm the date rather than assuming it falls exactly six months from your last day of enrollment.

If You Return to School Before Repayment Starts

Re-enrolling at least half-time before your grace period ends puts your loans back into an in-school status and pauses the countdown to your first payment. Notify your servicer directly if you go back to school during your grace period, the change does not update automatically just because your school reports your enrollment. Confirm with your servicer whether your grace period restarts in full once you leave school again, the answer can depend on whether you already used the one grace period tied to that particular loan.

Build Your Post-Grad Budget Before the Bill Arrives

List your expected monthly income against rent, food, transportation, and other fixed costs before your first student loan payment comes due. Add your estimated payment from the Loan Simulator to that budget as if it were already due, so the amount does not surprise you once billing starts. Setting aside the payment amount each month during your grace period, even without submitting it, makes the switch to an actual bill easier on your budget.

What to Do Before Your First Bill Arrives

Use the six months to pick a repayment plan that fits your actual income, not the default plan your servicer assigns automatically. Log into studentaid.gov and run the Loan Simulator to compare your estimated payment across plans, including the Repayment Assistance Plan that replaced the SAVE plan under the 2025 federal loan overhaul. Update your contact information and set up autopay before the first due date so nothing slips through during the transition out of school.

Waiving the Grace Period for PSLF

Borrowers working toward Public Service Loan Forgiveness while already in qualifying employment cannot simply call their servicer and have the six-month grace period waived, there is no such mechanism under the Direct Loan Program. The route to starting PSLF-qualifying payments sooner is applying for a Direct Consolidation Loan during the grace period, since a consolidation loan enters repayment immediately and carries no new grace period of its own. Doing so starts the PSLF payment count sooner, since months spent in the grace period do not count toward the 120 payments required for forgiveness. Talk to your servicer about the Direct Consolidation Loan process if you already work for a qualifying employer and want to start counting payments right away.