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Student loan deferment allows you to pause payments to your loans temporarily during financial hardship. There are various reasons someone might need to take a break from making student loan payments.
The federal student loan deferment process works differently from private student loan deferment, but both can provide financial relief if you’re experiencing hardship. Here’s a closer look at how to defer student loans and when it might make sense to do so.
In this guide:
- What is student loan deferment?
- Does interest accrue during deferment?
- How long can you defer student loans?
- How to defer student loans
- How to defer student loans when going back to school
- How many times can you defer student loans?
- Should you defer student loans?
- Are there other options outside of deferment?
What is student loan deferment?
Student loan deferment allows you to temporarily stop making payments to your student loans. It’s one of several options for managing student loans when you cannot make regular payments.
If a deferment period is granted, your obligation to make payments is suspended for a set time. Once the deferment period ends, you’ll resume making payments to your lender or loan servicer as scheduled.
Student loan deferment isn’t the same as loan forgiveness. When loans are forgiven, you’re released from the obligation to repay your outstanding balance. Deferment doesn’t reduce your loan balance and can increase what you owe if interest charges accrue.
Does interest accrue during deferment?
Whether interest accrues when student loans are in deferment depends on your loan type. Interest generally does not accrue during deferment if you have any of these types of subsidized federal student loans:
- Direct Subsidized Loans
- Subsidized Federal Stafford Loans
- Federal Perkins Loans
- The subsidized portion of Federal Family Education Loans (FFEL)
In contrast, interest accrues on unsubsidized federal loans in deferment. That’s important to know if you have Direct Unsubsidized Loans, Unsubsidized Federal Stafford Loans, or unsubsidized portions of FFEL loans. Interest will also accrue on Direct PLUS Loans and Direct Consolidation Loans.
Private student loans will likely accrue interest if your lender grants a deferment period. Making interest payments to your loans while in deferment can keep your balance from inflating.
How long can you defer student loans?
In most cases, you can defer federal student loans for up to three years. Exactly how long you can pause payments to federal loans depends on the type of deferment. You may qualify for an additional grace period with certain deferment options.
With private lenders, there is no standard timeline for deferments. Lenders have policies about how long to allow borrowers to defer payments or whether to allow deferment at all.
How to defer student loans
The qualifications for deferring student loans and the steps involved are different for federal and private lenders. You can’t just stop making payments to your loans. You’ll need to apply for deferment and be approved first, otherwise, you could end up in default which would cause a major hit to your credit.
If you’ve never applied for student loan deferment before, it’s helpful to know what to expect. We’ll walk you through how to defer federal and private student loans.
Federal student loan deferment
Federal student loan borrowers can apply for deferment through their loan servicer. Submit the appropriate form and provide the supporting documentation your loan servicer needs to process your deferment application.
The Federal Student Aid website includes information about the different deferment options available and links to application forms. It’s important to understand the types of deferments available to choose the right one for your situation.
In-school deferment is the only federal student loan deferment that’s automatic and doesn’t require you to apply. You qualify for deferment if you’re enrolled in school at least half-time. There’s no time limit for how long in-school deferment can last, provided the student is enrolled at least half-time.
A six-month grace period is included for most federal loans after you graduate.
Loans that are eligible for in-school deferment include:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Federal Stafford Loans
- Direct PLUS Loans
- FFEL PLUS Loans
If you think you meet the criteria for in-school deferment, but one is not granted to you automatically, the U.S. Department of Education advises contacting the school. The school can verify your eligibility and place your loans in deferment.
In-school parent deferment
Parents who take out Direct PLUS or FFEL PLUS Loans on behalf of an eligible student are eligible for in-school deferment if the student is enrolled at least half-time. Unlike in-school deferment for students, deferment for parents is not automatic, so parents must apply for it.
Parents need to submit an application to the loan servicer to defer loans while their student is in school. Parents can defer payments if the student remains enrolled at least half-time. In-school deferment for PLUS loans also includes a six-month grace period after graduation.
Federal borrowers who are unemployed or unable to find full-time work can request student loan deferment for up to three years. There are some stipulations to qualify:
- You’ll need to be receiving unemployment benefits and provide documentation, or
- Seeking work and be registered with an employment agency
Apply for unemployment benefits or register with an employment agency before applying for loan deferment. You’ll need to re-apply for unemployment deferment every six months.
Economic hardship deferment
Economic hardship deferment allows you to pause payments to student loans for up to three years. Eligibility extends to borrowers who:
- Receive state or federal assistance, including benefits through the Supplemental Nutrition Assistance Program (SNAP) or Temporary Assistance for Needy Families (TANF)
- Work full-time and have monthly earnings that are below 150% of the poverty guidelines for their family size and state of residence
If you qualify for an economic hardship student loan deferment, you’ll need to reapply every 12 months.
Peace Corps deferment
The federal government extends hardship deferments to borrowers who are serving in the Peace Corps. Eligible borrowers can defer student loan payments for up to three years. Once you qualify, you won’t have to re-apply every 12 months to remain eligible.
Military service is another possibility for deferring student loan payments. You may be eligible if you:
- Are on active duty military service, in connection with a war, military operation, or national emergency
- Completed qualifying active duty service and any applicable grace period for your loans
Military deferment ends if you re-enroll in school on at least a half-time basis or 13 months after completing active duty service and the grace period, whichever comes first.
Cancer treatment deferment
You may qualify for a deferment of student loans if you’re undergoing cancer treatment. You can request that your loans be deferred during treatment and for six months afterward.
Private student loan deferment
Private student loan lenders are not obligated to offer deferment to borrowers, but many choose to do so. The types of deferment offered are similar to the options for federal loans, though the qualification requirements for each vary by lender.
Contact your lender to see your deferment options, eligibility requirements, and how to apply. Even if you qualify for deferment, interest may accrue on your loans.
Here’s an overview of how to defer private student loans and which lenders offer it.
Deferring student loans while enrolled in school could make sense if you don’t have sufficient income or savings to make the payments. Most lenders require you to be enrolled at least half-time to qualify for in-school deferment. Your lender may offer a grace period following graduation.
Some private lenders that offer in-school deferment:
- College Ave
- Sallie Mae
Military service deferment
You may defer student loans during military service. It may be easier to worry about your loans once your service ends. Or you may need to create some breathing room in your budget temporarily.
Lenders that allow for military service deferments can have different requirements regarding the documentation needed to apply. The length of the deferment period can also vary by lender.
Some private lenders that offer military service deferment:
- College Ave
- Sallie Mae
Deferment for internships, clerkships, fellowships, or residency
Completing an internship, clerkship, or fellowship can provide you with valuable career training and experience. Residency is a requirement to complete your medical studies. While these programs might offer a paycheck, you may find it insufficient to meet your regular expenses and student loan payments.
In that case, deferring your loans could be to your advantage. Each lender will have different qualification and documentation requirements. Check with your lender to find out how to apply and how long you’ll be able to defer your loans.
Some private lenders that offer deferment for internships, clerkships, fellowships, or residency:
- Sallie Mae
Financial hardship deferment
Financial hardships can take different forms, and deferment can offer relief. The requirements you’ll need to qualify and the length of time you’ll be able to defer your loans can depend on the lender.
Some private lenders that offer financial hardship deferment:
- College Ave
How to defer student loans when going back to school
Going back to school at least half-time should qualify for in-school deferment. Your federal loans are placed in deferment when the school reports your enrollment status to the loan servicer. If you have private loans, ask the lender if documentation is needed to defer your loans.
Continue making loan payments until you receive confirmation that your loans are in deferment. Defaulting on federal student loans or private loans could damage your credit score. You could also be subject to collection actions and be barred from taking out new loans until you get current on your existing loans.
How many times can you defer student loans?
Federal student loan borrowers can request deferment as many times as they qualify. However, there is a cumulative 36-month cap on total deferments.
Private lenders can have similar limits, though you’ll need to ask your lender about the specific timing to see what’s allowed. You can also ask about other possibilities for managing your loans if you’re struggling to keep up with the payments.
Should you defer student loans?
It could make sense to defer student loan payments in certain situations. If you’re still in school and living on a tight budget, you might need to put off payments until you graduate and get a full-time job.
With federal subsidized loans, you don’t have to worry about interest accruing and being added to your loan balance. If you have private loans or unsubsidized loans, on the other hand, you may want to consider making interest payments in deferment so your balance doesn’t increase.
If you only need temporary relief, then deferment could be a good option. But if you anticipate being unable to make payments once deferment ends, then it may not be a good idea. Talk to your loan servicer or lender to discuss the best way to manage your loans.
Are there other options outside of deferment?
Student loan deferment is a form of temporary relief, not a permanent solution. If you’re unable to qualify for deferment or you’ve exhausted your deferment period, you may need to consider other options for managing loans, including:
- Income-driven repayment
- Federal student loan consolidation
- Private student loan refinancing
Forbearance is similar to deferment, in that you’re able to take a break from making your loan payments, but it has a key difference. During forbearance, interest continues to accrue on your loans. So that could increase the amount you have to repay once payments resume.
Income-driven repayment can lower your monthly payments and potentially allow you to have some of your loans forgiven. There are several income-driven repayment options but generally, your payments are tailored to your income and household size. You may pay more in interest over the life of the loans.
Consolidating federal loans can streamline the payments, though it won’t reduce your cumulative interest rate. But it could be an attractive option if you’re having a hard time keeping up with multiple payments.
Refinancing loans into a private loan can potentially reduce your interest rate and streamline your monthly payments. However, you won’t enjoy the same protections offered by federal loans if you refinance them into a private loan.
Skip a payment
Some private lenders may allow you to skip a payment on your loans when you have a positive account history. The loan payment doesn’t go away; instead, it gets added on to the end of your loan term.
Whether you qualify for deferment or explore one of these other options, it’s important to first talk to your lender or loan servicer. They can help you find the best solution for handling your loan payments and avoiding default.
Author: Rebecca Lake