When Do You Start Paying Back Your Student Loan? Everything You Need to Know
Student loans are a common way for students to finance their education, but the question of when to start paying back a student loan can often be confusing. For many, understanding the exact timeline and conditions under which repayments begin is crucial to managing their finances after graduation. In this article, we will explore when you start paying back your student loan, what factors affect your repayment timeline, and tips on managing your student loan repayment efficiently.

When Do You Start Paying Back Your Student Loan? Key Factors to Consider
The short answer to when do you start paying back your student loan depends on several factors, including the country where you studied, the type of loan you have, and your income level. For students in the United States, the United Kingdom, and many other countries, repayment typically begins once you graduate, leave school, or drop below half-time enrollment. However, specific loan terms and conditions can vary widely.
In the U.S., federal student loans are structured so that repayment starts six months after graduation or after the student leaves school. This six-month grace period is known as the grace period, and it gives graduates time to secure employment and financial stability before they are required to start making payments.
Similarly, in the UK, student loan repayments also begin after you finish your studies, but the repayment threshold is based on your income level rather than when you graduate. For example, in the UK, Plan 2 student loans (for students who started university in 2012 or later) require repayments only if your income is above a certain threshold, typically around £27,295.
In the next sections, we will dive deeper into the repayment timelines for different countries and loan types to help you better understand when you start paying back your student loan and what you need to know to make smart repayment decisions.
When Do You Start Paying Back Your Student Loan in the United States?
In the U.S., the general rule for when you start paying back your student loan is that repayments will begin six months after you graduate, leave school, or drop below half-time enrollment. This six-month period is called a grace period, and during this time, interest may still accrue on certain types of loans.
Types of Federal Loans and Repayment Timelines
- Federal Direct Subsidized Loans: For subsidized loans, the federal government pays the interest during the grace period, meaning you will not accrue additional interest during this time. After the grace period ends, you will begin making payments on both the principal and the interest.
- Federal Direct Unsubsidized Loans: For unsubsidized loans, interest will begin accruing as soon as you take out the loan. This means that while you may not be required to make payments immediately after graduation, the interest will continue to accumulate during your grace period, which can add to the total balance of your loan once repayment begins.
- Federal PLUS Loans: These loans, which are available to parents and graduate students, also have a six-month grace period. However, PLUS loan borrowers can choose to begin repayment immediately after the loan is disbursed, or they can wait until the end of the grace period. The interest on PLUS loans also continues to accrue during the grace period.
Alternative Repayment Plans in the U.S.
For those struggling with repayment, various income-driven repayment plans are available to make the repayment process more manageable. These plans are typically based on your income level and family size, and they may extend the repayment period.
- Income-Based Repayment (IBR): This plan caps monthly payments at 10% to 15% of your discretionary income and extends the repayment period, depending on your income.
- Pay As You Earn (PAYE): This plan also limits payments to 10% of your discretionary income but offers additional benefits for borrowers who meet certain eligibility requirements.
When Do You Start Paying Back Your Student Loan in the UK?
In the UK, when you start paying back your student loan depends on your income level rather than when you graduate. The UK’s student loan system is designed to be income-contingent, which means you begin paying back your loan once you reach a certain income threshold.
Plan 1 Loans
If you took out a student loan for a course started before September 2012, your loan falls under Plan 1. For Plan 1 loans, repayment begins once your income exceeds £22,015 per year (as of 2023/24). The amount you pay is 9% of your income above this threshold. So, for example, if you earn £25,000 a year, you would repay 9% of the £2,985 that exceeds the threshold, which works out to approximately £268.65 per year or £22.39 per month.
Plan 2 Loans
If you took out your student loan for a course started after September 2012, you fall under the Plan 2 category. The repayment threshold for Plan 2 loans is £27,295 per year (as of 2023/24), and you will pay 9% of your income above this threshold. As with Plan 1 loans, if your income is below the threshold, you won’t need to make any repayments.
Postgraduate Loans
For postgraduate loans, which are taken out for master’s or doctoral programs, the repayment threshold is £21,000 per year (as of 2023/24). Borrowers will pay 6% of their income above this threshold.
When Will Your Loan Be Written Off?
In the UK, student loans are typically written off after a set number of years. The loan cancellation period depends on your loan plan and when you took out the loan:
- Plan 1 Loans: Written off 25 years after the April you were first due to repay, or when you turn 65, whichever comes first.
- Plan 2 Loans: Written off 40 years after the April you were first due to repay.
- Postgraduate Loans: Written off 40 years after the April you were first due to repay.
What Happens If You Don’t Start Paying Back Your Student Loan?
While it may feel tempting to delay repaying your student loan, doing so can have serious consequences. For federal loans in the U.S., failing to make payments can result in default, which could harm your credit score, leading to difficulty securing future loans. In the UK, failing to repay your student loan after reaching the income threshold can also negatively affect your credit, although the UK system is generally more lenient with late repayments.
However, in both countries, there are deferment options available if you are facing financial hardship. For example, in the U.S., you can apply for forbearance or deferment, which temporarily suspends your payments without defaulting on your loan. Similarly, in the UK, you may be able to apply for a temporary suspension of payments under certain conditions.
When Do You Start Paying Back Your Student Loan: Tips for Managing Your Repayments
To make the most of your student loan repayment experience, here are a few tips for staying on top of your payments and minimizing the burden of debt:
- Keep Track of Your Loan Details: Know the terms of your loan, including the interest rate, repayment plan, and grace period. This will help you stay informed about when you start paying back your student loan and what to expect.
- Set Up Automatic Payments: Setting up automatic payments can ensure you never miss a payment, helping you avoid late fees and other penalties.
- Consider Refinancing or Consolidating: If you have multiple loans or are facing high interest rates, refinancing or consolidating your loans could be a good way to simplify repayment and potentially lower your interest rate.
- Explore Income-Driven Repayment Plans: If your income is low, consider applying for an income-driven repayment plan to make your payments more manageable.
Conclusion
Understanding when you start paying back your student loan is key to managing your finances effectively after graduation. The timing depends on your loan type and income level, and each country has its own system of repayment. Whether you’re in the U.S. or the UK, it’s crucial to stay informed about your repayment obligations and plan ahead to avoid financial stress. By understanding your repayment schedule, taking advantage of deferment options if needed, and exploring strategies for lowering your loan balance, you can make student loan repayment a manageable part of your financial journey.