What Happens to My Student Loan When I Go to Grad School?

Going back to school can be a difficult decision to make. Going to grad school and repaying existing student loans while withdrawing new student loans can complicate the decision-making process. Being able to defer current student loans while attending grad school can ease your financial obligations while you are in school.

Student Loans

Student loans come in subsidized, unsubsidized and private loans. Although grants do not have to be repaid, student loans do have to be repaid with interest. Common student loans are the Perkins loan, the Stafford loan, the Grad PLUS loan and Parent PLUS loans.

Grad School

Graduate school is an advanced education that starts after undergraduate studies. A student in medical school is in graduate school. A student in law school is in graduate school. A student pursuing a doctorate is in graduate school. Student loans can be used to fund graduate schools, but Pell grants are not accepted in a graduate school program.

Deferring Student Loans

Subsidized and unsubsidized government student loans, such as the Stafford loan and Grad PLUS loans, are eligible to be deferred while you are in grad school as long as you are enrolled in a minimum of six semester hours. While subsidized student loans are in deferment, the government pays the interest. You will begin to pay interest after you have graduated and begin paying on the loan. You will not be responsible for any interest during the deferred time period. Unsubsidized student loans, however, will accrue interest, and you will be responsible for paying the accrued interest once your loan is out of deferment. Private loans may be put in deferment depending on your contract with your loan provider. Contact the loan provider for details on deferment and the process involved.


Student loan payments commence six months after a student finishes school or drops below six semester hours of study. Any student who has difficulty finding a job or making enough money to cover living expenses can request a deferment to delay payments until finances stabilize. Failure to make your payments can result in a default, which can further result in the government seizing your federal and state income tax refunds to repay the loans. Student loans are rarely discharged in a bankruptcy process.