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For most federal student loans (like Direct Subsidized and Unsubsidized Loans), you get a six-month grace period after you graduate, leave school, or drop below half-time enrollment. During this time, you are not required to make monthly payments. This period is designed to give you time to find a job and choose a repayment plan. However, interest may still accrue during the grace period depending on the type of loan you hold.

With Direct Subsidized Loans, the US Department of Education pays the interest that accrues while you are in school at least half-time, during your grace period, and during periods of authorized deferment. This makes subsidized loans much cheaper. With Direct Unsubsidized Loans, you are responsible for paying the interest that accrues during all periods. If you choose not to pay it while in school, it will capitalize (be added to your principal) when repayment begins.

Income-Driven Repayment (IDR) plans set your monthly student loan payment as a percentage of your discretionary income (usually 5% to 10% depending on the specific plan, like the SAVE or IBR plans). Your income and family size are re-evaluated annually. If your income is low enough, your monthly payment can be as low as $0. Additionally, any remaining loan balance is forgiven after 20 or 25 years of qualifying monthly payments.

Public Service Loan Forgiveness (PSLF) is a federal program that forgives the remaining balance on your Direct Loans after you make 120 qualifying monthly payments under an income-driven repayment plan while working full-time for a qualifying employer. Qualifying employers include federal, state, local, or tribal government organizations and 501(c)(3) non-profit organizations. PSLF forgiveness is completely tax-free.

Consolidation involves combining multiple federal student loans into a single Direct Consolidation Loan, which simplifies payments but keeps a weighted average interest rate. Refinancing involves replacing your existing loans (federal, private, or both) with a new private loan from a commercial lender. Refinancing can lower your interest rate if you have good credit, but doing so converts your federal loans to private loans, permanently losing federal protections and forgiveness options.

Missing a student loan payment will cause your loan to become delinquent. If you are delinquent for 90 days or more on a federal loan (or sooner on private loans), your lender will report the delinquency to the major credit bureaus, damaging your credit score. If a federal loan is unpaid for 270 days, it enters default. Defaulting allows the government to garnish your wages, withhold your tax refunds, and sue you for the full balance.

Interest capitalization occurs when unpaid interest that has accumulated on your loan is added to your principal balance. This typically happens at the end of your grace period, or when exiting a period of deferment or forbearance. Once interest is capitalized, future interest charges are calculated on the new, larger principal amount, which increases the total amount you owe over the life of the loan.

Student loans use a daily simple interest method. Each day, interest is calculated by multiplying your outstanding principal balance by your interest rate, and dividing by 365.25. When you make a payment, the money goes first to pay the interest that has accumulated since your last payment. The remaining money is then applied to reduce your principal balance.

Discharging student loans in bankruptcy is difficult but not impossible. To do so, you must file a separate action called an 'adversary proceeding' and prove that repaying the loans would cause 'undue hardship' to you and your dependents. This requires meeting the Brunner Test, showing you cannot maintain a minimal standard of living, your situation is likely to persist, and you made good faith efforts to repay.

Private student loans are issued by private companies like banks, credit unions, or online lenders. They require a credit check, and students typically need a creditworthy cosigner to qualify. Private loans have interest rates based on market conditions and credit profiles, which can be fixed or variable. They do not offer federal benefits like income-driven repayment or public forgiveness.