JB Pritzker, Governor, State of Illinois

Grace Period

A Federal Stafford loan borrower is entitled to a grace period during which payments of principal are not required.  The grace period is intended to provide the borrower with time to find employment and prepare to repay their student loan.

Length of the Grace Period

A borrower’s grace period begins on the day after (s)he ceases to be enrolled on at least a half-time basis at an eligible school by either graduating, withdrawing, or simply not taking enough classes to be considered enrolled half time.  This date is also referred to as the out-of-school date and is provided by the school.  If an earlier withdrawal date is not reported, the lender should use the anticipated graduation date as the out-of-school date.

The grace period typically lasts six months, but could be longer depending upon when the loan was disbursed.  A six-month grace period is authorized for all Federal Stafford loan borrowers who have variable rate loans or loans with a fixed 8%, 9%, or 8%/10% rate of interest. 

For more specific information on rates, refer to the Interest Rates Charts for Federal Stafford, Federal PLUS, Federal SLS, and Federal Consolidation loans provided on the FSA Financial Partners portal.

A borrower is only allowed one grace period on a loan or on a group of loans that have been merged into a single repayment schedule.  However, if the borrower ceases to be enrolled at least half time and then re-enrolls at least half time at an eligible school before the entire grace period expires, the borrower is considered to have been continuously enrolled, and the loan remains in the in-school status.  Once the grace period expires in it entirety, no further grace periods are allowed.

Payment of Interest During the Grace Period

For subsidized Federal Stafford loans, interest that accrues during the grace period is subsidized (paid by) the U.S. Department of Education.  For unsubsidized Federal Stafford loan, payment of the interest is the responsibility of the borrower from the day of disbursement.  The interest can be paid by the borrower on a monthly or quarterly basis, depending upon the agreement reached between the borrower and the lender.

Waiver of the Grace Period

A borrower may waive all or a portion of his/her grace period by submitting a written request to the lender.  Once the grace period is waived, it may not be reinstated.  This limitation applies even if the borrower re-enrolls at least half time before the amount of the time originally allotted for the grace period has elapsed.

For further information regarding grace periods, such as military extensions and aligning the repayment of Federal Stafford and SLS loans, see the Common Manual.