The grace period is a specified period of time (usually six months) after borrowers graduate, leave school, or drop below half-time enrollment where they are not required to make payments on certain federal student loans. Some federal student loans will accrue interest during the grace period, and if the interest is unpaid, it will be added to the principal balance of the loan (capitalize) when the repayment period begins. You do not have to make payments during this time, but you can get a head start if you want to reduce the amount of interest that you owe.