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Student Loans Student Loan Repayment

Can You Defer Student Loans While in Graduate School?

Enrolling in graduate school often means you can defer payment on student loans. Most loan servicers require borrowers to be enrolled at least half-time to qualify for an in-school deferment. 

The specific rules can depend on whether you have federal or private loans. The Department of Education establishes deferment guidelines for federal loans; individual lenders can set the rules for private loans. 

Deferring student loans while in grad school has advantages and disadvantages. Here’s a closer look at when and how to defer student loan repayment as a graduate student. 

In this guide:

Can you defer federal student loans while in graduate school?

You’re eligible for an in-school deferment of federal student loans if you’re enrolled at least half-time in an eligible graduate program. If you took out Direct PLUS Loans to finance your education, you’re eligible for an additional six months of deferment if you drop below half-time enrollment. 

In most cases, deferment for graduate school is automatic, and your loan servicer should notify you that loan repayment is paused. If you enroll in grad school and don’t get automatic deferment, you can ask your school to update your enrollment status with your loan servicer or submit an In-School Deferment Request form.

>>Read more: Do you have to pay student loans while in school?

Does interest accrue on federal loans while you’re enrolled in graduate school? 

Yes; interest accrues. But whether you or the government pay the accrued interest depends on the type of loan. 

Here’s how responsibility for paying accrued interest works with different federal loans: 

Loan typeBorrower responsible for interest that accrues during deferment?
Direct Subsidized LoansNo
Direct Unsubsidized LoansYes
Subsidized Federal Stafford LoansNo
Unsubsidized Federal Stafford LoansYes
Federal Perkins LoansNo
Direct PLUS LoansYes
Subsidized Portion of FFEL Consolidation LoansNo
Unsubsidized Portion of FFEL Consolidation LoansYes
Subsidized Portion of Direct Consolidation LoansNo
Unsubsidized Portion of Direct Consolidation LoansYes

If you’re responsible for paying the accrued interest on any of your loans while enrolled in graduate school, you have two choices:

  1. Make payments.
  2. Let the interest capitalize

Allowing it to capitalize can increase the total amount you must repay once you graduate. 

You can defer federal student loans whether you’re going to graduate school right after finishing your undergraduate degree or are returning to school after being in the workforce. Even if you’ve already begun making payments on your loans, you can defer them if you’re enrolled at least half-time. 

What about the grace period for federal loans? Here’s how that works with deferment:

  • If you return to school at least half-time while your loans are still in their grace period, you’ll be eligible for the entire six-month grace period once you leave school or drop below half-time enrollment. 
  • Consolidating loans during the grace period means forgoing any remaining time in the grace period, regardless of your enrollment status. 

Consolidating federal student loans doesn’t affect your deferment options, though it can affect whether you’re responsible for interest that accrues while in school. The government pays the subsidized portion of Direct Consolidation Loans but not the unsubsidized amount. 

Can you defer private student loans while in graduate school?

Private student loans can help close undergraduate or graduate degree funding gaps. Most lenders offer in-school deferment for borrowers who enroll in graduate school at least half-time. 

Unlike federal loans, deferment may not be automatic. You may need to contact your lender to specify you’d like to place your loans in deferment while attending graduate school. You may need to fill out an application form and obtain verification of your enrollment status from your school. 

Whether you’re going right from undergrad to grad school or returning to school later, you should be able to defer your loans if you meet the lender’s requirements for enrollment. 

Keep in mind: Interest will likely continue to accrue on your loans. 

LenderDeferment eligibilityInterest accrues?How to apply
AscentMust be enrolled in an eligible school at least half-time.
Deferment extends the repayment period.
Submit requests through Launch Servicing.
College AveNo payment required while enrolled in school.Log in to your College Ave account to select the “Deferred” payment option.
EarnestStudents enrolling at least half-time in an accredited graduate school can defer loans for up to 36 months.Submit a Deferment Request form.
Sallie MaeStudents enrolling half-time or full-time can request deferment of loans for up to 48 months.Submit an In-School Deferment Request form.
SoFiMust be enrolled at least half-time in an eligible school.Submit requests through SoFi’s loan servicer, Mohela.

If your lender offers a grace period and you apply for deferment during that time, you may be able to resume the full grace period once you leave school or drop below half-time enrollment. Contact your lender to find out exactly how that works. 

Refinancing your student loans shouldn’t affect your deferment options, as lenders are more concerned with your enrollment status. If you’re contemplating refinancing your loans but are unsure how it might affect your ability to defer payments, talk to your lender beforehand. 

Should you defer loans for graduate school?

Deferring student loans while enrolled in graduate school has pros and cons. 

On the pro side, you can take a break from making payments while in school. That might be important if you’re cutting back at work to return to school or have yet to launch your career. 

Now for the cons. The biggest is that interest can accrue on deferred loans while in school, leaving you with more money to pay back later. 

Here’s an example of how the costs can add up if the borrower defers $30,000 in student loans for 24 months:  

Before defermentAfter defermentDifference
Total student loan payments$38,183.46$42,001.81$3,818.35
Monthly payment$318.20$350.02$31.82

This example assumes a 10-year repayment term and an interest rate of 5%. It also presumes that interest accrues and is capitalized at the end of the deferment term. 

When interest accrues on your loans and you—not the government—pay it, the result can be a higher loan balance and monthly payment. So it’s important to consider whether a reprieve from payments now justifies what you might pay back later. 

If you’re considering deferring student loans while in school, it may be advantageous only to defer Subsidized loans since the government picks up the tab on the interest. Running the numbers for Unsubsidized or private loans through a deferment cost calculator can help you decide whether it makes sense to pause payments on those loans. 

Can you still pay your student loan if it’s in deferment?

Deferring your student loans while in grad school allows you to hold off on making payments, but you can still pay toward your loans while in school. 

Doing so could work in your favor. Making interest-only payments to Unsubsidized or private student loans in deferment can keep capitalizing interest from inflating your balance. You could also make payments toward the principal on Subsidized federal loans to chip away at your balance while in school. 

Remember: Deferment is also an opportunity to review your repayment options for federal loans. For instance, it might make sense to apply for income-driven repayment once you graduate if you don’t think you can afford the monthly payment a standard repayment plan requires.

How to defer loans for graduate school

If you have federal student loans, they should be deferred automatically once you enroll in graduate school at least half-time. If you register and your loans aren’t placed in deferment, you can contact the school to verify your enrollment or submit a request for deferment. 

The process for deferring private student loans for graduate school will depend on the lender. You may need to submit a deferment request form or update your payment choices in your online account dashboard. 

When deferring graduate student loans, it’s wise to know:

  • How long your deferment period will last.
  • Whether interest will accrue during the deferment period, and who is responsible for paying it. 
  • What grace period will apply to your loans if you leave school or drop below half-time enrollment.
  • When the first payment toward your loans will begin.
  • What repayment options you might have.