 TITLE: What Is a Student Loan Grace Period? CONTENT: Do You Pay Interest During the Grace Period?\n--------------------------------------------\nYou can wait to make your first student loan payment when it's due, but that's not always the best choice. If you only have subsidized loans, there's no financial harm in letting the grace period run its course because interest isn't increasing your debt. If you borrowed $20,000 for your education with a subsidized loan, that's exactly the amount you'll begin paying off when the grace period ends.\nOn the other hand, if you have unsubsidized loans, interest will accrue during the designated grace period. You can wait until the grace period ends to begin paying on your loan, but you should try to pay off at least the accrued interest before that.\nWhy? Because it will stop the interest on your loan from capitalizing, which is when the interest that has accrued while you were in school and during the grace period gets added to your loan principal—costing you much more over the loan term. One of the easiest ways to pay your interest before the loan capitalizes is to send in monthly payments that cover the interest. Contact your loan servicer and make the arrangements. END