Do I Have to Pay My Private Student Loans While I’m Still in School?

 December 21, 2020
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Do you have to pay student loans while in school? In most cases, the answer is no. Federal student loans, as well as most private student loans, come with a grace period, meaning payments are deferred until after you graduate.

However, private student loans do accrue interest while in school, so it could be a smart idea to make interest-only payments while you’re still a student. To help you decide, let’s answer the following questions:

Do you have to pay student loans while in school?

Thankfully, most lenders understand that students can’t afford full student loan payments while they’re in school. That’s why most lenders defer student loan payments while you’re enrolled in school and, in most cases, for an additional six months after you graduate.

But each private lender sets its own rules, so it’s important to read your loan documents carefully before you sign them. It is possible that a lender could expect immediate repayment, particularly if you borrowed a parent loan, so you want to make sure you understand exactly when repayment begins.

If you have federal student loans, you don’t have to pay them while in school either. Your monthly payments will kick in six months after you graduate or drop below half-time enrollment.

A grace period gives you a little time to get on your feet and find a job. You should use the time to your advantage by saving aggressively while you aren’t making monthly payments. Try to tuck away a few hundred dollars each month for your student loan payments, and don’t let lifestyle inflation set in.

Do private student loans accrue interest while in school?

Even though the answer to, “Do you have to pay student loans while in school?” is usually no, that doesn’t mean you should wait to make payments. Private student loans accrue interest while you’re in school, meaning your loan balance will keep growing.

Unsubsidized federal student loans also accrue interest from the date of disbursement. The only loans that are immune from interest accrual are subsidized federal loans, which are awarded to students with financial need.

To understand how much interest will accrue on your student loans, use our student loan payment calculator.

Is making in-school payments on your student loans worth it?

While most student loans don’t require payments while you’re in school, that doesn’t mean that you shouldn’t start paying them off early if you can afford it.

One of the biggest reasons to start making payments on private loans or unsubsidized federal loans right away is the interest.

You accrue interest on the balance every day — even when you’re in school. That means you’ll be paying the principal balance, interest and eventually, interest on that interest if you don’t start student loan repayment early.

Paying off some of that interest while you’re still in college will also help your overall loan balance stay manageable. Early payments made during college can be as little as $25, too. Plus, it will give you some relief when it comes to making full student loan payments after graduation.

Regardless of whether you pay student loans while in school, make sure to be your own advocate and ensure you fully understand what you are agreeing to when it comes to private student loan repayment before signing your documents.

How to extend your student loan grace period

On the other hand, you might be able to extend your grace period by applying for deferment or forbearance if you can’t afford your student loan payments after you leave school.

If you’re going back to school, have a limited income or are enrolled in a certification class or an internship, check with your lender to see if the company offers deferment or forbearance options.

Just remember that interest may still accrue even when you defer payments on private student loans. So do the math and make sure deferment is financially the best option for you.

If your goal is to save money on interest and pay off your student loans as fast as possible, making extra payments is the way to go.

Rebecca Safier and Sage Evans contributed to this report.

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