What Happens to Your Student Loans If You Return to School

19 November 2025

Life doesn’t follow a straight path, right? Sometimes we take detours. Maybe you landed a job that isn’t what you imagined, or perhaps you’ve found a passion you didn’t know existed. Either way, going back to school might be your next big move. But there’s one little (or not-so-little) thing nagging at you—those student loans. What happens to your student loans if you return to school?

Let’s dive into this head first, but don’t worry—we’ll keep it casual, clear, and totally jargon-free.

Back in School? Let’s Talk Student Loan Status

First off, big props for considering going back to school. That takes courage, and it can be a smart investment in your future. But now you’re wondering: “Do I have to keep making those monthly student loan payments when I’m a student again?”

Well, the answer depends on a few things—mainly the type of loan you have and how many credits you’re taking.

Federal Loans Hit the Pause Button (If You’re Eligible)

If you have federal student loans, here’s the good news: they usually go into deferment when you return to school at least half-time. That means you don’t have to make payments while you’re in classes. Sounds like a breather, right?

But wait—before you start celebrating, there’s one important detail. Deferment doesn’t always mean interest takes a vacation too.

Subsidized vs. Unsubsidized Loans

Here’s the breakdown:

- Subsidized loans: You’re in luck. The government covers the interest while you’re in school. So your loan balance doesn’t grow while you’re studying.
- Unsubsidized loans: You still don’t have to pay, but the interest keeps piling up. That interest gets added to your balance (a scary thing called capitalization). So when you graduate, you might owe more than you borrowed.

Kind of like putting your loan on a treadmill—it’s not standing still even if you are.

Private Loans Work a Little Differently

Federal loans are pretty generous. Private student loans? Not so much.

Whether your private lender allows a deferment when you go back to school really depends on their specific policies. Some may offer in-school deferment, but others might not. And even if they do, interest will almost certainly continue to accumulate.

So if you’re thinking of heading back to school and you’ve got private loans, call your lender. Lay it all out. Ask if you can pause payments and what happens with the interest. It’s always best to know where you stand rather than assume things will magically work out.

What Does "Half-Time Enrollment" Actually Mean?

You've probably seen the phrase "at least half-time enrollment" more than once by now. But what does that even mean?

In most schools, half-time enrollment usually means taking at least 6 credit hours per semester (that’s typically about two classes). Every school might define it a little differently, so it’s good to double-check with your school’s financial aid office.

If you dip below half-time status—even accidentally—your deferment ends, and your loans could enter repayment mode. Basically, if you start slacking on your Netflix binge replacement (aka attending class), your loans notice.

What Happens If You Drop Out or Take a Break Again?

Let’s say you return to school, defer your loans, and then life throws a curveball. You have to take a leave of absence or drop out. What happens then?

As soon as you stop being enrolled at least half-time, your grace period clock starts ticking. For most federal loans, that’s a six-month grace period before you have to resume payments. Private loans may not offer a grace period, so again—check with your lender.

If you used up your grace period before, you might not get another one. So be sure you're mentally and financially ready before making that leap back into student life.

Taking Out New Loans? Be Strategic

If you’re heading back to school, you might need to borrow again. You absolutely can take out new student loans even if you still owe on your old ones.

But here’s the kicker—make sure you’re not just stacking debt without a plan. Borrow only what you need, and aim to go into a program that gives you a solid return on your investment. Think long-term. Will this degree help you earn more? Get a better job? Switch to a career you actually love?

More importantly—how much will it cost you in total? Don’t go for the "college shopping spree" effect. Be picky and choose wisely.

Is Loan Forgiveness Still an Option?

Yes, it can be! If you're working towards Public Service Loan Forgiveness (PSLF) or pursuing another forgiveness program, going back to school could hit the pause button on your progress, since months in deferment or forbearance usually don’t count toward forgiveness.

But here’s a workaround: if you’re working full-time in a qualifying job and attending school part-time, you might still be able to make income-driven repayment (IDR) payments. And those will still count toward forgiveness—win-win!

Moral of the story? Forgiveness is still possible, but you need to play your cards right.

Should You Keep Paying During School?

If you can swing it, yes—absolutely.

Even when your loans are in deferment, you’re still allowed to make payments. And doing this can save you a ton in interest, especially with unsubsidized or private loans. Think of it like clean-up during halftime—you’re keeping the game from getting messier.

Even small payments help. Try rounding up your coffee budget and putting that toward your loan. Those little amounts add up. Future you will thank you.

How to Notify Loan Servicers That You're Back in School

You might assume your loan servicer will automatically know you’re back in school. And usually, they will—schools report enrollment status to the National Student Clearinghouse, which loan servicers use to track students.

But, technology isn’t perfect, and errors happen. If you’re not seeing your loans go into deferment, here’s what to do:

1. Contact your school’s registrar or financial aid office to confirm your enrollment was reported.
2. Reach out to your loan servicer directly and request in-school deferment.
3. Be prepared to submit an In-School Deferment Request Form and proof of enrollment.

It’s a little paperwork, but it’s way better than finding out you missed a loan payment and your credit took a hit.

Can Returning to School Hurt Your Credit?

Generally, returning to school doesn't hurt your credit score. In fact, not making payments during deferment doesn’t affect your credit negatively. As long as your loans are in good standing and you're keeping your servicer in the loop, you're good.

But if the deferment doesn't go through and you skip a payment thinking you’re in the clear? That can hurt. So always double-check your loan status and make sure everything is squared away.

What If You’re Going to Grad School?

Going to grad school? You’re in the same boat as undergrads when it comes to deferment. If you're enrolled at least half-time, you can usually put your existing student loan payments on hold.

But here’s the twist—some grad students start making much higher salaries post-degree. So if you’re going to grad school for a high-earning career (think MBA, law, medicine), you might want to keep paying down your loans if you can. Your future loan balance will be grateful.

Wrapping It All Up: Your Game Plan

Returning to school is a big decision, and managing your student loans while doing it can feel overwhelming. But with a bit of planning, you can absolutely make it work. Here's your quick checklist:

✅ Check your current loan type and status
✅ Verify your new school counts you as at least half-time
✅ Ensure your enrollment is reported to loan servicers
✅ Decide if you'll request deferment or keep making payments
✅ If needed, apply for deferment formally
✅ Watch loan interest closely—especially with unsubsidized and private loans
✅ Plan your post-school career to avoid more debt than necessary

And most importantly—don’t ghost your loans. Communication with your loan servicer is key. If you’re overwhelmed, call them. They're not the boogeyman—they want to help you stay in good standing.

Final Thoughts

Let’s face it, navigating student loans is about as fun as doing taxes in the dark. But it doesn’t have to be painful. If you’re returning to school, you’re doing something big—something bold. And with a few smart moves, you can handle your student loans without them haunting your every step.

Remember, education is an investment. Just make sure it's a smart one, so when you're walking across that stage again, you're not weighed down by even heavier debt.