The Grace Period

The grace period is the time between when you graduate, or are no longer enrolled in school at least half time, and when you must begin repayment. The grace period usually is:

You don’t have to make any payments during the grace period, but there are differences in how interest accrues for unsubsidized and subsidized loans:

  • Unsubsidized Stafford loan: You don’t have to make any payments during the grace period. But if you have an Unsubsidized Stafford loan, you could save a lot of money by paying interest during the grace period. In fact, you can start repaying while you are in school, before the grace period even begins. This reduces the cost of borrowing because the interest won’t be capitalized.
  • Subsidized Stafford loan: If you have a subsidized loan, paying while you’re in school doesn’t save you money. That’s because subsidized loans don’t build up interest costs while you’re enrolled or during the grace period. Note, however, that interest will accrue during the grace period on subsidized loans made between July 1, 2012 and July 1, 2014.

Remember, you are responsible for knowing the details of your loan and its grace period. If you don’t know, use the NSLDS Links to an external site. to find out.

 

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