Stafford Loans have a six-month grace period that begins when you leave school or drop below half-time status. If you haven’t used up this time due to past breaks in enrollment, your six-month grace period will start the day after you leave school. During your grace period, you do no have to make loan payments.

If you take a break from school and re-enroll at half-time status or above before the end of your grace period, the repayment on your loans will be deferred. Then, when you leave school again, your grace period will start over. However, if you use the entire six months up and then return to school, you will not receive another grace period upon leaving the next time.

While in your grace period, the federal government pays the interest on subsidized loans that accrues during the six months. On unsubsidized loans, you can either pay the interest during this period or request that the interest be capitalized (added to the principal balance of the loan).

Repaying a Stafford Loan can take as long as 10 years. Depending on your loan amount and income level, you will need to choose from the following repayment schedules:

Standard Repayment
Your monthly payment will be at least $50 a month or the interest due on the loan, whichever is greater. The amount is determined so that the loan is repaid within 10 years or less.

Graduated Repayment
Payments start out low and gradually increase during the course of repayment. You have up to 10 years to repay your loan.

Income-sensitive Repayment
Payments are adjusted annually based on your income. Depending on the size of debt and monthly income, you may have up to 15 years to repay your loans.

Extended Repayment
For borrowers who have no outstanding FFELP loans made before October 7, 1998 and FFELP loan debt over $30,000, you receive a standard or graduated repayment schedule for a period of up to 25 years.

For an idea of what your monthly payments may look like, use the Monthly Payment Chart. This chart does not show the effects for those who capitalize interest on unsubsidized Stafford Loans.

While you're in school, you do not have to make loan principal payments on either your subsidized or unsubsidized Stafford Loan as long as you are enrolled above half time (6 credits). (The loan principal is the original amount that you borrowed.) Interest payments are handled differently based on the type of Stafford Loan you have.

If you have a subsidized Stafford Loan, the government will pay interest on your loan for you while you are enrolled in school and during your grace period. If you have an unsubsidized Stafford Loan, you're responsible for all interest payments. If you want to, you can postpone interest payments on your unsubsidized Stafford Loan while you're in school. If you do, your lender may capitalize the interest (add the accrued interest to the principal balance of your loan). Depending on the size of your debt this could substantially increase your interest costs and monthly payments.

Use the Approximate Monthly Interest Chart and the Calculate Capitalized Interest to estimate how capitalized interest may affect your monthly payments.