Federal Direct Subsidized and Unsubsidized Loans are deferred for six months after graduation before you owe your first payment. That window, called the grace period, starts the day after you graduate, withdraw, or drop below half-time enrollment. Graduate PLUS borrowers get the same six-month pause under a slightly different name. Parent PLUS Loans and private student loans work differently, and the details matter because they decide whether interest is quietly piling up on your balance.
Six Months for Direct Subsidized and Unsubsidized Loans
Both Direct Subsidized Loans and Direct Unsubsidized Loans carry a six-month grace period beginning the day after your enrollment status changes.1Federal Student Aid. Subsidized and Unsubsidized Loans During this window your servicer sends you repayment information and your first due date, but no payment is required.
The grace period can be preserved if you go back to school. Return at least half-time before it ends and the clock stops; when you later leave again, a new six-month grace period begins.2eCFR. 34 CFR 685.204 – Deferment Students who take breaks between programs get a fresh six months after each departure.
Graduate and Professional PLUS Loans
If you borrowed Direct PLUS Loans as a graduate or professional student, you also get six months with no payments after you leave school. Technically these loans don’t have a “grace period” — they qualify for a post-enrollment deferment that functions the same way.2eCFR. 34 CFR 685.204 – Deferment The important practical difference is interest: it accrues on PLUS Loans during the pause, unlike Direct Subsidized Loans.
Parent PLUS Loans Are Not Automatic
Parent PLUS Loans work differently. Repayment begins once the loan is fully disbursed, with no automatic grace period. A parent borrower can request a six-month deferment that begins after the student for whom they borrowed graduates, withdraws, or drops below half-time.3Federal Student Aid. Parent PLUS Borrower Deferment Request It has to be requested. Parents can also defer while the student is still enrolled at least half-time, but again only by filing the form with the servicer.
Private Student Loans Follow the Contract
Private student loans aren’t governed by the federal grace period rules. Each lender sets its own timeline in the promissory note. Some match the federal six months. Others give three months, or require payments to begin immediately after graduation, or require interest-only payments while you’re still enrolled.
Federal law requires private lenders to disclose their repayment terms, including any payment deferral options, fees, and whether interest accrues while you’re in school, before the loan is finalized.4Office of the Law Revision Counsel. 15 USC 1638 – Transactions Other Than Under an Open End Credit Plan Your original loan documents will show your specific repayment start date; if you can’t find them, contact the lender.
What Actually Starts the Clock
Your grace period doesn’t begin on graduation day itself. It starts the day after your enrollment status changes in your school’s records. Three events trigger that change:
- Graduating from your degree or certificate program.
- Withdrawing before you finish.
- Dropping below half-time, which for most undergraduate programs is six credit hours per term.5FSA Partner Connect. FSA Handbook Chapter 4 – Enrollment Status Minimum Requirements
Your school’s registrar reports enrollment changes to the National Student Clearinghouse, which then notifies your loan servicer. The process is automatic; your servicer will know your grace period has started even if you never contact them. If you think your status was reported incorrectly, contact your school’s registrar to fix the record.
Interest During the Pause
Whether interest builds during the grace period depends on the loan:
- Direct Subsidized Loans: the federal government covers the interest during the grace period, so your balance stays the same.6Federal Student Aid. Top 4 Questions – Direct Subsidized Loans vs. Direct Unsubsidized Loans
- Direct Unsubsidized Loans: interest accrues from first disbursement and keeps accruing through the grace period.6Federal Student Aid. Top 4 Questions – Direct Subsidized Loans vs. Direct Unsubsidized Loans
- Direct PLUS Loans: interest accrues during the post-enrollment deferment.
- Private loans: interest typically accrues, though terms vary by lender.
Unpaid interest on unsubsidized or PLUS loans capitalizes at the end of the grace period, meaning it gets added to your principal balance, and you then pay interest on the larger amount for the rest of the loan.7Nelnet – Federal Student Aid. Interest Capitalization A $10,000 unsubsidized loan at the current undergraduate rate of 6.39% would build up roughly $320 in interest over six months.8FSA Partner Connect. Interest Rates for Direct Loans First Disbursed Between July 1, 2025 and June 30, 2026 Left unpaid, that would raise your balance to $10,320. You can make voluntary interest payments during the grace period to prevent capitalization even though nothing is required yet.
If Six Months Isn’t Enough
If the grace period is ending and you still can’t afford payments, you have two main routes: an income-driven repayment plan or an additional deferment.
Income-driven plans set your monthly payment as a percentage of your income rather than your balance. Payments can be as low as $0 if your income is low enough. The main plan available for most borrowers is Income-Based Repayment, which caps payments at 10% or 15% of discretionary income (the amount you earn above 150% of the federal poverty level), depending on when your loans were first disbursed. A new Repayment Assistance Plan is scheduled to become available by July 2026, with payments ranging from 1% to 10% of adjusted gross income. Unlike deferment, payments under these plans count toward eventual forgiveness after 20 or 25 years of qualifying payments, and you stay in good standing.
The SAVE Plan is being wound down following legal challenges and a federal settlement, and borrowers who were enrolled are being moved to other repayment options.9U.S. Department of Education. U.S. Department of Education Continues to Improve Federal Student Loan Repayment Options
Additional deferment options after the grace period ends include:
- Economic hardship, if you’re receiving certain federal or state benefits (like SNAP or TANF), serving in the Peace Corps, or earning below a threshold set by family size.10Federal Student Aid. Economic Hardship Deferment Request
- Unemployment, if you’re receiving unemployment benefits or actively seeking full-time work.
- Military service, if you’re on active duty or recently demobilized, with the deferment extending 180 days past your demobilization date.2eCFR. 34 CFR 685.204 – Deferment
- In-school deferment, if you return to school at least half-time.
Each request needs supporting documentation and goes to your loan servicer. Processing usually takes about 10 business days, though many online requests are handled within 24 hours.11Nelnet – Federal Student Aid. FAQ – Deferment and Forbearance While your request is being reviewed, your servicer may place the loan in a temporary administrative forbearance for up to 60 days to keep the account from going delinquent.12eCFR. 34 CFR 682.211 – Forbearance A deferment can be applied retroactively if you qualify, but generally not more than six months before the servicer received the request.
Watch Out for Consolidation During the Grace Period
If you’re thinking about consolidating your federal loans, know that doing it during the grace period can cost you the rest of that time. Once a Direct Consolidation Loan processes, any underlying loans that were in a grace period immediately enter repayment.13FSA Partner Connect. Direct Consolidation Loan Processing Information
To avoid this, enter an expected grace period end date on the consolidation application. That delays processing until shortly before the grace period ends, so you keep the full six months of payment-free time. Leave the field blank and processing begins right away, ending the grace period early.
What Happens If You Miss Payments Anyway
Once the grace period ends, if you haven’t enrolled in a repayment plan, requested deferment, or arranged forbearance, missed payments trigger an escalating series of consequences. Your loan becomes delinquent the first day a payment is late, though your servicer won’t report it to the credit bureaus until you’re 90 days past due.14Central Research Inc. Student Loan Delinquency A credit report entry can significantly damage your score and stays on your record for up to seven years.
After 270 days without a payment, your federal loan goes into default.15Federal Student Aid. Student Loan Default and Collections – FAQs Default consequences are much harsher: the federal government can withhold up to 15% of your disposable earnings through administrative wage garnishment without a court order,16U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act the Treasury Offset Program can seize your federal tax refund and reduce Social Security payments,17Bureau of the Fiscal Service. Treasury Offset Program – How TOP Works collection fees can substantially increase what you owe, and you lose eligibility for additional federal student aid.
These consequences are hard to reverse once they start. If you already know you won’t be able to afford payments when your six months are up, apply for an income-driven plan or deferment before the grace period ends rather than waiting until a payment is missed.