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If you're a recent college grad (or your enrollment status has dropped below half-time), you'll want take advantage of your student loan grace period. A grace period is the time between losing your "enrolled" status and when you're required to start paying off your loans. Here are some tips on making the most of your student loan grace period.

Get Your Ducks in a Row

It's important to note that not all student loans have grace periods of the same length. According to U.S. News, while subsidized and unsubsidized Stafford loans have a standard six-month grace period, Perkins loans have a nine-month grace period. PLUS loans and private loans don't have any grace period at all.

Remember that most loans accrue interest during grace periods. Many recent college grads do not realize interest is compounding even though payments aren't due. This can lead to major miscalculations of what you owe.

Other things to consider are exactly how many loans you have, how much you owe and what the interest amounts are. You'll want to reach out to your lenders and set up a repayment plan that works best for you. Set your monthly due dates and decide whether you want to make payments manually or automatically. Most lenders offer a slight discount if you choose automatic payments.

Make Lifestyle Adjustments

Set yourself up for budgeting success when you start paying back your loans. Now is the time to start tweaking your lifestyle so you have the means to pay your student loan payments.1 Consider scaling back on expenses like eating out or shopping. Look for areas where you can save. You can also take on side hustles to stash extra cash so you'll be able to stay on top of payments.

If you're making major life moves, such as looking for a job or possibly uprooting to a new city, include your student loan payment into your budget and plan accordingly. You don't want to take a job that doesn't pay enough or move into an apartment where you'll struggle to keep up with student loan payments.

Remember, Interest May Still Kick In

The government pays the interest on your subsidized federal loans while you're in school, but the interest on most loans starts to accrue after you graduate or become less than a half-time student. Your unsubsidized loans, on the other hand, start to accrue interest the moment they're distributed.

While you aren't required to pay during those six(ish) months, the interest will cause your total balance to grow. So if you make a dent in your student loans right from the get-go, you'll ultimately be paying less — because the longer you put off paying off your loans, the more interest you'll have to pay. If you can swing it, make interest-only payments during your student loan grace period.

Take Advantage of Your Broke College Student Mentality

You may be used to living on very little as a college student. Use those skills to scrounge up money for paying off your student loans. As your interest is starting to rack up, aim to make a dent on your loans while your living expenses are still minimal.

Your grace period is a perfect time to prep for your student loan payments. If you aren't ready to make payments yet, it's a great opportunity to gather all the necessary details and make a plan about your student loans.


Laurel Road is a KeyBank company.

This information and recommendations contained herein are compiled from sources deemed reliable, but are not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or are offering any tax, accounting, or legal advice.

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