Can Student Loans Come Due Before You Graduate?

Between classes, homework, internships and campus activities, college students already have enough on their plates without adding finding a way to pay their student loans. That’s why most federal and private student loans offer in-school deferment, a temporary postponement of student loan payments while the borrower is in school. During this deferment, monthly payments are not due, there is no impact on credit and interest may or may not accrue, depending on the loan.

But despite the deferment option, students may end up paying their student loans while they’re still in school. By enrolling in enough credit hours, choosing the right repayment plan and avoiding situations where you could lose access to future aid, you can avoid adding another due date to your calendar.

What causes student loans to come due while you’re still in school

According to Sabrina Calazans, executive director of the Student Debt Crisis Center, there are really only two situations that cause your student loans to come due while you’re still in school.

“The only scenario where I would see that happening is if someone calls their servicer and says they want to opt back into payments, or if they’re below a certain number of hours required,” she says.

You fall below half-time enrollment

Falling below half- or part-time enrollment is the only thing that would directly trigger a required repayment of your student loans while you’re in school.

For undergraduate students, that threshold is six credit hours. If you take less than six credits at a time, you will fall below part-time status.

For graduate students, the exact number of credit hours that define part-time status depends on the institution, says Jill Desjean, director of policy analysis at the
National Association of Student Financial Aid Administrators (NASFAA).

“For graduate students, schools actually have flexibility to define what is full-time and what is part-time,” she says. “So that will actually depend on your school and your program’s policies.”

Students may seek a smaller class load for many reasons, but lenders interpret taking fewer than six credit hours at a time as a sign they will not complete college in a timely manner. Part- or full-time enrollment shows that the student is committed to school and keeps them on path to earning their degree in a specific amount of time that meets a school’s Satisfactory Academic Progress (SAP) requirement.

You choose to pay during school

Federal student loans do not require you to start payment right away. The program doesn’t have specific repayment plans for paying while in college, but you can choose to make consistent payments or pay here and there throughout your schooling. Reach out to your servicer to see what options you have.

Private loans are a little different. Most private student loan lenders offer in-school deferment and a grace period, along with options to make payments while still in school:

• Flat rate: You pay a flat amount, such as $25, each month. This usually covers a portion of the interest charge, which helps reduce the total cost of the loan.
• Interest-only: You only pay the interest charge on the loan. By paying the interest charge, you’ll prevent your loan balance from increasing while you’re in school.
• Full monthly payment: You begin making full payments while still in school. This covers the interest charge and a portion of the principal balance. This option gives you the lowest lifetime interest cost. Additionally, you’ll pay your loan off earlier than if you deferred payment for four years. To get an accurate estimate of your full monthly payment, use a student loan calculator and input your own student loan rate and terms.

While budgeting for in-school payments may be tricky, they can save you thousands of dollars. For example, if you take out a $20,000 private student loan with a 15-year term and seven percent interest rate, here is what you’ll pay if you pay your student loans while you’re in school or if you defer payment until after you graduate.

What about losing access to federal aid?

There are some instances where you may become ineligible to receive additional aid. These situations may include:

• You default on a previous student loan
• Your eligible noncitizen status is revoked or expired
• You become incarcerated
• You commit fraud to obtain the aid
• You don’t actually have a high school diploma or state-recognized equivalent
• You are not making satisfactory academic progress

These situations don’t directly cause your loans to come due. Instead, they cause you to lose access to additional federal financial aid, including student loans.

This lack of financial aid may cause you to drop below part-time, take a semester off or withdraw from school altogether. At that point, your grace period and subsequent repayment will trigger.

If you can find a way to pay for at least six credits, according to Desjean, you can get back on track without triggering repayment.

Once you become eligible for federal student aid again, you can reapply for financial aid. Remember, you fill out the FAFSA every year.

You can also appeal the decision that made you ineligible if there were contributing circumstances. These could include illness or injury, hospitalization, death of a loved one or other unforeseen catastrophes. Your school will have an appeal form that you can fill out and submit with supporting documentation.

What if your student loans come due before you graduate?

Whether you drop below half-time or choose a repayment plan that starts after funds are dispersed, the required monthly payment shouldn’t come as a surprise. But if you aren’t in either situation and receive an unexpected notice that you owe payments, it’s important to contact your service right away, says Calazans. Your service may have sent the notice by mistake or may have incorrect information affecting your repayment.

Another place to check in is your school’s registrar’s office, according to Desjean. “That’s typically the office that’s doing enrollment reporting, where they’re submitting a giant file to the Department of Education saying, ‘Here are all of our students who are enrolled, and this is what their enrollment status is,’” she says. “And, sometimes … someone doesn’t make it on the list. It’s not common, but I’ve definitely seen it happen.”

And when that happens, the ED may think you’re no longer enrolled. But Desjean says that, while schools typically report monthly or bimonthly, the registrar may be able to do a one-off report for you to get you into the right status.

Take advantage of the grace period

Luckily for student loan borrowers, federal and private student loans offer a grace period. Usually lasting six months, the grace period allows you to forgo student loan payments without penalty. It helps provide breathing room as you find a job and prepare to make payments.

You automatically trigger the grace period when you no longer meet the minimum enrollment status because you graduated from college, dropped below part-time status or took a semester or more off.

If you use only part of your grace period and re-enroll at least part-time, your grace period will reset, and you’ll get the full six months back. When you graduate school or discontinue your schooling, you will have another six-month grace period. However, Desjean warns, if you use the full six months of your grace period, you will not get another grace period. “At that point, you would go straight into repayment,” she says.

Prepare for repayment

While you’re in your grace period or approaching graduation with no grace period to hold you up, take the following steps to succeed in repayment.

1. Choose the right repayment plan: Calazans recommends federal student loan borrowers use the loan simulator tool on StudentAid.gov, which will give you the estimated monthly payment on all the plans that you qualify for. “You can also call your loan servicer directly and ask them to identify which repayment plans you qualify for and what your monthly payment will be,” she says.

   An income-driven repayment plan may be the best option for students, since they typically don’t make a ton of money and can’t work full-time due to their class schedules and work loads. An income driven repayment plan basis your monthly payment on your income and payments can be as low as $0 per month.

2. Review your loan information: Make sure you know your interest rate, loan term, monthly payment amount, due date and how to pay. If you have any questions, think there is a mistake or wish to change your repayment plan on your private student loan, reach out to your lender.
3. Rework your budget: Ensure you have enough money to cover your new monthly payment as well as your other expenses.
4. Make on-time payments: By paying at least the minimum payment on your due date every month, you can develop a strong payment history and increase your credit score.
5. Seek assistance immediately: If you’re struggling to make your student loan payment, reach out to your servicer to see what you can do. You may be able to go into a forbearance or deferment or restructure your payment plan.

Bottom line

Student loans can only come due while you’re in school if you fall below part-time or choose to make payments. If neither situation occurred, and you’re told that you need to start making payments, reach out to our service to find out why. You may also need to visit your campus registrar’s office to ensure you’re reported as enrolled.

If you choose to repay your student loans while you’re in school or go below part-time enrollment status, plan ahead to put yourself in the best position to successfully make payments to your loans. Review your repayment options and choose the one that best fits your budget.