More students are choosing to pursue postbaccalaureate education. The National Center for Education Statistics reported that the total postbaccalaureate enrollment increased by 9% between 2010 and 2021, the last available data.
But graduate school can be expensive; tuition and fees cost an average of $19,749 per year, which doesn’t include living costs. Most students will have to use student loans to cover some of the costs, and graduate school loans have different terms than undergraduate loans.
Do you have to pay student loans while in grad school? Whether payments can be deferred until after graduation depends on your loan type.
Should I Pay Off Undergraduate Student Loans During Grad School?
The majority of bachelor’s degree recipients have student loan debt. If you pursue a master’s degree, any additional loans will be on top of your existing loan balances. If that burden is stressful for you, consider making payments while in grad school to pay down your undergraduate loans.
Making payments can cut down on accrued interest and help you save money and pay off your debt faster. However, making payments against your existing debt only sometimes makes sense. When deciding what to do, ask yourself these questions:
- What types of loans do I have? If you have federal student loans, your loans are automatically deferred while you’re in graduate school. But with private student loans, that may not be the case. Some private lenders offer deferments, but others don’t. You may be required to make full payments against the principal and interest if you have private loans.
- What are my career goals? If you plan on working for the government or a non-profit organization after you graduate and have federal student loans, you could qualify for loan forgiveness under Public Service Loan Forgiveness. In that case, making payments on your undergraduate loans could be a mistake since that’s money you could put toward other goals.
- What other debt do I have? If you have other forms of debt, such as a car loan or credit card balance, you may be better off paying off those balances before tackling your student loans. They typically have higher rates and fewer borrower protections than student loans, so getting them out of the way can help you become financially secure.
With a deferment calculator, you can see how deferring your payments affects your total repayment cost.
Learn more: The Differences Between Graduate and Undergraduate Student Loans
How To Defer Student Loans While in Grad School
If you’d like to defer your undergraduate or graduate student loans while pursuing a master’s or doctoral degree, the deferment process depends on your loan type.
Federal Student Loans
Federal student loans can be a useful financing option for undergraduate and graduate degrees.
With federal student loans, you can benefit from an automatic in-school deferment. Your existing federal loans are automatically deferred if you’re enrolled in an eligible program at least half-time.
Federal Loans for Graduate School
For graduate school, you can use Direct Unsubsidized loans to pay for your education, but there are annual and aggregate limits. If you reach those limits, you may need to take out a Grad PLUS Loan to pay for graduate school, which has a higher rate.
If you take out additional loans for your graduate program, your loan payments are automatically deferred while you’re in school and for six months after you graduate or drop below half-time status.
Private Student Loans
Whether your private student loan payments are deferred varies by lender. Some offer in-school deferments as long as you’re enrolled on at least a half-time basis, while others will require you to continue on your current payment schedule with your existing loans.
To defer your payments, follow these steps:
- Review your loan agreement: Your loan agreement or promissory note will outline your repayment terms and what circumstances are eligible for deferment.
- Contact your lender: To request a deferment or to ask questions about a lender’s policies, contact the lender or loan servicer customer support department.
- Fill out the necessary forms: Typically, lenders will require you to fill out and submit a form that states you are enrolling in graduate school and are requesting a deferment. You may need to have a portion of the form filled out by your graduate program registrar’s office or submit other proof of enrollment.
Does Interest Accrue on Loans While in Graduate School?
If you defer your loans, interest may continue to build.
With federal student loans, interest will accrue on your loan during your deferment, and it’s capitalized — added to the loan principal — once your loans enter repayment. The only exception is with Direct Subsidized Loans; the government waives the interest that would accrue during any deferment period with these loans.
If you have private student loans, interest accrues on all loans during the deferment, and the interest is capitalized once your loans become repayment.
What Are My Student Loan Payment Options in Grad School?
As a graduate student, there are a few ways to manage your loan payments:
Standard Repayment Plans
With a standard repayment plan, you have a 10-year repayment period with fixed monthly payments. Although the monthly payments can be high, you’ll be out of debt sooner.
Income-Driven Plans
Federal student loan borrowers with unaffordable payments may be eligible for an income-driven repayment plan. These plans base your payments on your family size, discretionary income, and location, and you could qualify for a significant decrease.
Private student loans aren’t eligible for income-driven repayment plans, but some lenders have alternative payment options that can temporarily reduce your payments. Contact your lender to see what options are available.
Student Loan Forgiveness
Depending on your loan type and career goals, you may be eligible for loan forgiveness through programs like Teacher Loan Forgiveness or Public Service Loan Forgiveness. With these programs, a portion of your debt is forgiven after meeting your service and payment obligations, and you can enroll in an income-driven repayment plan as you work toward loan forgiveness.
How ELFI Can Help With Your Loans
With ELFI, you can take out loans for your undergraduate or graduate program, but you can also get help with your student loan questions. An ELFI student loan advisor can review your options with you and help you through the application process. And if you need to refinance high-interest student loan debt, ELFI can help you there, too.
Reach out to a student loan advisor via chat, phone, text or email.
