Paying after school ends…

Q. Can I pay anything before the 6-month grace period is up?

A. Yes. And if you can, you should. That'll save you more money than paying on your student loan at any other time.

The next FAQ tells you why.

Q. I graduated this year. How long do I have before I have to start paying on my student loans?

A. You can wait until that six-month 'grace period' ends. That means your first monthly payment comes due on the 1st day of the seventh month after you left school. But your loan will be bigger by the end of that 'grace period' if you just wait during this time.

When you were in school, the government paid the interest costs on your loan. But during that 6-month 'grace period' after school, you get charged for the interest. It's not obvious to you because you don't see a statement. But it all just gets added to the principal amount of your loan.

'Grace' period sounds nice, and it's great if you really can't pay anything during this time. But what you're doing in the grace period is putting off (deferring) payment so your loan can grow bigger from the interest costs.

There are two reasons you should pay everything you can during your grace period – and the sooner after school, the better.

First, you'll make more impact by paying now, when your money goes directly to the principal. (The principal is the amount you borrowed).

Second, unlike all the other government student loan interest you'll pay, the interest charged during this 'grace' period won't be eligible for your student loan interest tax credit. So the more principal you pay during the grace period, the less of this un-usable interest cost you have to pay.