Key Points
- Federal Direct subsidized and unsubsidized loans come with a six-month grace period after graduation.
- Medical and dental residents can pause federal payments through forbearance, in increments of up to 12 months, or through deferment — but interest keeps adding up the entire time.
- Private loans, including Abe® student loans, set their own grace and deferment terms, so residents should check those details before they borrow.
New doctors and dentists tend to finish school with some of the largest balances of student loan debt of any profession, and then have to start residencies on a modest salary. The months right after graduation, when payments are supposed to begin, are often the tightest.
Knowing how grace periods, deferment, and forbearance work can save a new graduate from costly mistakes during training.
In partnership with Abe® student loans, let’s break down how repayment works after medical, dental, and other professional programs, and what to check before borrowing. Get a quote here >>
What A Grace Period Actually Is
A grace period is the stretch of time after you leave school, or drop below half-time enrollment, before your first loan payment is due. For federal Direct subsidized and unsubsidized loans, that period is six months and applies automatically.
Grad and professional PLUS loans are a special case. They technically do not carry a grace period, but the federal program grants a six-month post-enrollment deferment that delays payments in the same way. The practical effect is similar, though interest treatment differs by loan type, and on unsubsidized loans interest keeps accruing the whole time.
Private loans can offer a grace period, but it varies by lender. For example, Abe® student loans offer 6 months of grace1, and then an extended grace period of an additional six months2 can be requested. For the first time, Abe is also offering extended deferments due to authorized leaves of absence, whether students are pursuing specialized opportunities or a research project before finishing their studies. The maximum extension for those with Abe medical, dental school or healthcare professional loans is 12 months.3
Residency Options: Forbearance and Deferment
Residency can last several years, far longer than a six-month grace period. Federal borrowers in a medical or dental internship or residency can use forbearance, which a loan servicer is required to grant if you qualify. It pauses payments in increments of up to 12 months, and you renew it as long as you remain eligible.
Deferment is another route, with its own eligibility rules. The catch with both is interest: during forbearance, and on unsubsidized loans during deferment, interest continues to build and can be added to your balance when payments resume. A resident who pauses payments for several years can owe noticeably more than they originally borrowed.
Private lenders’ forbearance and deferment options for residency vary. Abe® student loans offer up to 48 months of deferment while enrolled in a medical internship or residency program.4
What This Means For A Resident's Budget
On a resident’s salary, full loan payments on a six-figure balance are often unrealistic in the first year. That is what makes grace periods and forbearance useful, and also what makes them risky. Pausing payments protects cash flow now, but the unpaid interest does not disappear. When it capitalizes, future payments are based on a larger balance.
The better move for many residents is to understand every option before graduation: which loans offer a grace period, how long each pause lasts, whether interest accrues, and what a realistic payment looks like once training income rises. Going in with a plan beats reacting to the first bill.
Yes, the goal of all residents is to make more money once training is complete. But having that plan is key.
Private Loan Grace Periods Vary
Grace periods are not standardized across private lenders the way they are for federal loans, so the details matter. With the 2026 federal caps pushing more medical and dental students toward private borrowing, those terms deserve a close read.
Abe® student loans offer private student loans for professional students, and borrowers should review the grace period, any in-school and deferment options, and the rate before signing. In addition to offering competitive rates, Abe does not have accompanying application, processing or late fees, and covers up to 100% of college expenses5 after students have exhausted other sources of aid, such as federal loans, scholarships, and grants.
Review the repayment and grace period terms with Abe® student loans.
1 The grace period is six months. In the case of Abe Law loans, the grace period is nine months. The grace period begins on the earlier of the date (a) the student borrower graduates, (b) the student borrower ceases to be enrolled, or (c) that is 60 months from the first disbursement date, but in no case, earlier than six months after the first disbursement date. The Immediate Repayment option does not have a grace period.
2 The extended grace period is six months. In the case of Abe Law loans, the extended grace period is three months. If eligible, the extended grace period begins on either (a) the day following the initial grace period, (b) the first day of delinquency during the repayment term, or (c) the due date of the current level bill. To be eligible for the extended grace period, the loan cannot have entered the repayment term more than ninety (90) days prior to the date the Servicer receives the request for payment relief. The Immediate Repayment option does not have an extended grace period. The repayment term will be extended by the number of months of extended grace applied to the loan.
3 For borrowers enrolled at an approved school and during an in-school period, grace period, or additional deferment period, if the school grants the borrower an authorized leave of absence (“LOA”), the loan will remain in the current deferment status. The school must certify that the LOA has been granted to the student or the LOA must be validated through the National Student Clearinghouse (“NSC”). Any such LOA may not exceed 12-months in length for Abe Medical, Dental or Healthcare Professionals borrowers, or six months in length for all other Abe borrowers and shall not cause the loan to be in an in-school or grace period beyond the date that is sixty-six (66) months from the first disbursement date or an additional deferment period beyond forty-eight (48) months. If, after the aforementioned approved LOA, the student borrower is not re-enrolled in a graduate certificate or degree seeking program at an approved school, the repayment term will begin.
4 Borrowers with Interest Only, Flat Payment or Full Deferment Loans may defer payments for an initial period of forty-eight (48) months while enrolled in a medical internship or residency program. With the Full Deferment Repayment option, principal and interest payments are deferred for a period of up to twenty-four (24) months, and payment of principal but not interest is deferred for a subsequent period of up to twenty-four (24) months. With the Interest Only Repayment or Flat Payment Repayment option, payment of principal but not interest is deferred for a period of up to forty-eight (48) months. Borrowers with Interest Only, Flat Payment or Full Deferment Loans may further defer full principal and interest payments for the duration of the student borrower’s enrollment in a medical internship or residency program, offered in twelve (12) month increments. The student borrower must provide official proof to the Servicer of continued enrollment on an annual basis. Any accrued and unpaid interest may be capitalized at the end of this additional deferment period in accordance with the Credit Agreement. The repayment term will be extended by the number of total months of deferment applied to the loan.
5 The minimum loan amount is $1,000, except for (a) student applicants who are permanent residents of Iowa in which case the minimum loan amount is $1,001, and (b) student applicants or cosigners who are permanent residents of Massachusetts in which case the minimum loan amount is $6,001. The maximum loan amount to cover in-school expenses for each academic year is determined by the school’s cost of attendance, minus other financial aid, as certified by the school. The requested loan amount cannot cause an individual student applicant’s aggregate education loan debt (which includes federal and private student loans) to exceed $300,000 per student applicant applying for an undergraduate loan, $350,000 per student applicant applying for a graduate, graduate certificate, Healthcare Professionals, Law or MBA loan, or $500,000 per student applicant applying for a Medical or Dental loan. The requested loan amount cannot cause the aggregate education loan debt of a cosigner, applying jointly for an Abe loan, to exceed $999,999.99.
Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.