When Are Student Loans Due? Your Repayment Questions Answered

3 minute read

Graduating college marks a significant life transition, often bringing a mix of excitement about achieving a degree and stress over upcoming financial responsibilities, particularly student loan repayment. A common question is, "When are student loans due?" The answer depends on the specific loan type.

When Do You Start Repaying Student Loans?

In most cases, repayment begins after a six-month grace period following graduation or leaving school. However, you are generally not required to wait that long and starting early can offer financial benefits.

It is important to review your specific loan terms to understand your exact expectations for repayment.

Federal Loans

The federal government offers multiple loan types with various repayment options, determined by information provided on the Free Application for Federal Student Aid (FAFSA).

Subsidized Loans

• Available for undergraduate students who demonstrate financial need.
• The U.S. Department of Education pays the interest while the student is enrolled at least halftime and during the six-month grace period.
• Once repayment begins, the borrower is responsible for the principal and accrued interest.
• Borrowers may be eligible for Income-Driven Repayment (IDR) plans, which can lower monthly payments and potentially lead to loan forgiveness.

Unsubsidized Loans

• Not based on financial need; available to undergraduate, graduate, and professional students.
• Interest begins accruing as soon as the funds are disbursed, and the borrower is responsible for all of it.
• Repayment begins six months after leaving school.
• These loans are also eligible for IDR plans.

Private Loans

Private or alternative loans are issued by various banks, credit unions, state-based agencies or other entities, so there is no standard repayment schedule. You must review your loan agreement carefully to understand when payments are due and the exact amount.

Some private options, like the NC Assist Loan, offer competitive fixed rates without fees. While repayment on the NC Assist Loan begins six months after you graduate (or fall below half-time enrollment), you are responsible for paying all accrued interest.

Are There Benefits to Paying Student Loans Early?

Yes, generally it is a good idea to start paying off your loans as soon as possible. (Always check with your lender first for any prepayment penalties; the NC Assist Loan has none, but some commercial lenders do).

Here are the key advantages of early payment:

• Save Money on Interest: Unless you have subsidized federal loans, interest starts accruing immediately. If you do not pay the interest while in school or during the grace period, it is capitalized (added to your principal balance) when repayment begins, so you pay interest on the interest. Paying early or making overpayments significantly reduces the total interest paid over the life of the loan.
• Build Good Credit: Consistently making payments early establishes positive financial habits and responsible money management, which helps build a better credit score over time.

Learn More About NC Assist Loans

NC Assist is committed to helping students with a connection to North Carolina achieve their higher education goals. Find answers to frequently asked questions on their student loan FAQs page. If you need funds to cover upcoming college expenses, you can submit an NC Student Assist Loan application today.