Do You Have to Pay Student Loans While in School?
This is one of the most common questions students ask when they receive their financial aid. For many first-time college students, this is their first experience borrowing money, and it can be overwhelming to figure out when repayment begins.
In this post, we’ll explain what you need to know about loan types, in-school payment rules, grace periods, and smart strategies to stay ahead of repayment before it begins.
The Short Answer: Usually, No
In most cases, you don’t have to make payments on federal student loans while you’re enrolled in school at least half-time. However, that doesn’t mean your loan isn’t (accumulating interest). Depending on the type of federal loan you have, interest may accrue while you’re attending classes and not making any payments. That means your balance could be bigger by the time you graduate. For private loans, the repayment option you select when you apply will determine if you are required to make payments while in school.
Know Your Loan Type
Understanding the type of loan you have is the first step to understanding your repayment options.
Federal Subsidized Loans
These are considered the most student-friendly loans because the federal government pays the interest while you’re in school at least half-time, during the six-month grace period after graduation, and during any approved deferment periods. That means your loan balance won’t grow as long as you meet these conditions, and you don’t have to make any payments until you leave school or drop below half-time enrollment.
NOTE: Subsidized loans are only available for undergraduate students with financial need per the results of the Free Application for Federal Student Aid (FASFA).
Federal Unsubsidized Loans
Unsubsidized loans are a little different than subsidized loans. Both undergraduate and graduate students can receive unsubsidized loans, and you don’t have to demonstrate financial need to be eligible. Also, interest begins accruing from the moment your loan is disbursed, even while you’re in school. Although you’re not required to make payments until after graduation or dropping below half-time enrollment, the unpaid interest is added to your loan balance when repayment starts. This is called capitalization, and it can significantly increase the total amount you’ll repay over time. If you’re able, making small interest payments during school can help reduce your overall loan cost.
Private Student Loans
Private loans work differently depending on the lender; however, interest normally begins to accrue once your loan has been disbursed. Some lenders may require you to begin making payments (either interest-only or full payments) while you’re still in school. Others might offer deferment options similar to federal loans. Because private loan rules vary so much, it’s important to review your loan agreement (also called a promissory note or credit agreement) or contact your lender directly to understand your repayment terms.
Not sure what kind of loan you have or who your loan servicer is? You can log in to StudentAid.gov to view your federal loan details and find your servicer’s contact information.
If you’re considering a private student loan, Higher Education Servicing Corporation (HESC) is a Texas-based nonprofit that provides loan servicing and low-cost education loans to Texas residents. And if you’re confused about loan terminology, check out our Financial Aid Glossary to help you understand the basic language of financing your education.
What’s a Grace Period?
Most federal student loans come with a six-month grace period after you graduate, leave school, or drop below half-time enrollment. During this time, you’re not required to make loan payments, which gives you time to find a job, move and settle into post-college life.
Grace periods are a valuable buffer, but they don’t last forever. Interest continues to accrue on unsubsidized loans during the grace period, so it’s still smart to track your loan balances and make a plan before repayment begins.
For private student loans, grace periods can vary widely. Some lenders offer a six-month grace period, while others may expect repayment to begin immediately, depending on the repayment terms of your loan. Check with your lender to confirm your timeline.
Optional: Making Payments While in School
Just because you’re not required to make payments while enrolled doesn’t mean you shouldn’t. Making small payments now, especially on the interest that builds on unsubsidized or private loans, can make a big difference down the road.
Here’s why early payments are a smart move:
You reduce the total cost of your loan. Paying down interest before it capitalizes can help keep your balance from growing.
You build a positive credit history. Regular, on-time payments (even small ones) can help establish your credit score.
You build strong money habits. Making student loan payments part of your monthly routine now prepares you for successful repayment later.
Even $10 or $25 a month can help. You might want to set up auto-pay through your loan servicer’s website so you don’t have to think about it every month.
What if You’re Struggling Financially?
If you’re required to make payments right away (like with some private student loans) and you’re having trouble keeping up, you may qualify for a temporary pause through deferment or forbearance.
Deferment allows you to stop making payments for a set period of time. If you have federal subsidized loans, interest typically doesn’t accrue during deferment. Federal unsubsidized loans and most private loans will accrue during periods of deferment.
Forbearance also pauses your payments, but interest continues to accrue on all loan types, including federal subsidized, federal unsubsidized and most private loans.
Most federal student loans are automatically placed into deferment while you’re enrolled at least half-time, but it’s still good to verify your loan status with your servicer.
If you’re unsure what your options are, contact your loan servicer or visit HESC’s Financial Literacy Center for tools and information on managing your loans and budget.
Stay Informed
The most important thing you can do as a borrower is stay informed. Know what types of loans you have. Understand the terms, including interest rates, deferment options and repayment timelines. And most importantly, know who your loan servicer is and how to contact them. This information will be essential once repayment begins.
Use the time you have while in school to educate yourself about your loan responsibilities. The more you know now, the more control you’ll have later.
Still have questions? Don’t hesitate to reach out to HESC or your loan servicer so you can make smart decisions that reduce your financial stress later.