Usually, when you borrow money, whether it’s a car loan, a mortgage, or even a credit card, you have to start repaying it immediately. But student loans are a little different. Federal loans and many private loans have an option for deferred payments, which means you don’t need to worry about making any loan repayments until after you graduate.
If you’re going to school full-time, this is great news. You can focus on earning your degree and broadening your skill set without worrying about how you’ll make a monthly loan payment. But there are several downsides to deferring student loan payments that you should consider before choosing this option.
Below, we’ll explain what it means when student loan payments are deferred and how it can affect you in the long term.
Table of Contents
What is student loan deferment?
Student loan deferment is a short-term suspension of your student loan payments. During a deferment, you can’t be penalized for missed or late payments; rather, you and your lender have agreed to pause payments until a later date. In most cases, however, interest still accrues during student loan deferment, and you’re responsible for paying that back.
Many federal and private student loans offer in-school deferment, which means payments typically don’t begin until after graduation and the subsequent grace period (often six months) ends:
- Deferring federal loans while in school: As long as you’re enrolled at least half-time (e.g., as an undergraduate or graduate student), you can defer federal student loan payments. Interest does not accrue on Direct Subsidized Loans, but it does on most other federal loans, including Direct Unsubsidized Loans and Parent PLUS Loans.
- Deferring private loans while in school: Many private lenders also offer a deferred student loan repayment option while you’re in school, and they may also offer deferments for other reasons. Interest typically still accrues on deferred private loans.
Common reasons for deferred student loans
In-school deferment is the most common type of student loan deferment, but it’s not the only reason you might be able to postpone payments. The Federal Student Aid Office indicates the following as other valid reasons to postpone student loan payments:
- Active duty military service
- Undergoing cancer treatment
- Economic hardship
- Unemployment
- Rehabilitation training (e.g., for mental health or alcohol abuse)
- Graduate fellowship
The impact of deferred student loans
Deferred student loans can be a blessing if you’re enrolled in school full-time and can’t afford to cover payments, but depending on the type of student loan, be prepared for the big negative impact: unpaid interest that you’ll need to pay back, increasing your borrowing costs in the long run.
Federal Subsidized Loans
When you take out a federal Direct Subsidized Loan, the government pays your interest for you while you’re in school at least half-time (yes, really!). That means your loan doesn’t accrue interest as long as you remain enrolled in school.
You don’t need to start making payments or worrying about interest until six months after graduation, though you’re certainly welcome to make payments early to lower your balance before interest kicks in.
Pausing your student loans won’t damage your credit score directly, but there are still ways deferred student loans can affect your credit history.
Federal Unsubsidized Loans
While federal Direct Unsubsidized Loans also allow you to defer payments, they start accruing interest while you’re in school. If you’re able to make small payments to keep the interest in check or even chip away at the principal balance, you can save yourself money in the long run.
Grad PLUS loans
Grad PLUS loans also have deferred payments, but one of the major implications of the One Big Beautiful Bill Act (OBBBA) for student loans is the elimination of the Grad PLUS loan program starting on July 1, 2026.
The Parent Plus loan program will remain, but the OBBBA makes it a far less attractive borrowing option for parents. And deferment isn’t guaranteed with those; payment kicks in 60 days after disbursement. Parents can submit a deferment request, but there’s no guarantee it will be granted.
Private student loans with deferred payments
Most private student loans offer multiple repayment options, including:
- Full principal and interest payments during school
- Interest-only payments during school
- Flat payments (often $25 a month) during school
- True deferred payments until after graduation (and a grace period)
Interest-only payments are a nice middle ground between repaying during school and deferring payments until after school. When you graduate, you won’t have to worry about any interest that accrued during school because you’ll have been paying it off each month.
If you choose to defer payments, all the unpaid interest will get added to your principal balance once payments begin, and you’ll now accrue interest on the borrowed amount and that added interest. This is called interest capitalization, and it makes student loans much more expensive.
Given the choice, we recommend selecting federal Direct Subsidized Loans because they don’t accrue interest while you’re in school.
Considerations for student loans with deferred payments
As you’re figuring out how you’ll pay for school (likely a mix of grants, scholarships, and student loans), think through whether deferred payments will make the most sense for your needs. If in-school deferment is a priority, consider the following:
Deferred loans for college or graduate school
In-school deferment isn’t a given for every student loan. To qualify for deferment:
- Enroll at least half-time: Federal student loan deferment requires at least half-time enrollment. Private lenders typically have the same requirements.
- Choose the right federal loan type: Prioritize federal loans that allow deferment (most do), but also pay attention to how interest accrues. Whenever possible, prioritize Subsidized Loans (no interest accrued during school). Parents taking out PLUS loans will need to take an extra step to request deferred payments, but there’s no guarantee you’ll get approved.
- Prioritize specific private lenders: If federal loans won’t cover the full cost of college, limit your search to the best private student loans that don’t require payments while in school. We’ve rounded up our picks below.
Deferred loans for internship, residency, law clerkship, or fellowship
You might also be able to defer student loan payments during an internship, residency program, law clerkship, or fellowship, but here’s what to keep in mind:
- You can request to defer federal student loans for a graduate fellowship program.
- Medical and dental residents can’t defer loans during residency, but they can apply for a service-based mandatory forbearance request. Just remember: Deferment and forbearance are not the same thing.
- Some private lenders, like Sallie Mae, offer deferment options for internships, residencies, law clerkships, and fellowships. Research individual lenders to understand deferment options and requirements.
What are the advantages and disadvantages of deferred payments?
Waiting to make student loan payments until after graduation can be a game-changer, but there are drawbacks to consider.
Pros of deferred payments
- No payments (and thus no stress) while in school
- No interest accrual on Subsidized Loans
- No threats to credit score during deferment
- Post-graduation grace period during which payments aren’t due
Cons of deferred payments
- Higher loan payment after graduation (because no progress is made during school)
- Interest accrues on most loans
- Interest often capitalizes, meaning it gets added to the principal balance (and you’ll earn interest on that new, higher amount)
I advise students and parents to choose a repayment plan that aligns with both their current and estimated future cash flow, without putting unnecessary strain on the budget.
I also caution them not to make two common assumptions:
- Don’t assume that a cosigner can be easily removed. (This should be planned for in advance.)
- Don’t assume the loan balance will remain unchanged if payments are deferred until after graduation.
In most cases, interest will continue to accrue and increase the balance unless it’s a federal Subsidized Loan.
Alternative student loan repayment options
In-school deferment is a popular option for student loan repayment because it allows you to focus on school, but it’s not your only option. Here are the other typical student loan repayment options, though these may vary by lender:
- Full: Full payments mean you make a monthly payment that goes toward the principal and interest while in school.
- Interest-only: Interest-only payments mean you make a monthly payment that goes only toward interest while in school; this is a lower, more manageable payment that aims to keep interest in check.
- Flat: Many lenders allow you to make a flat, or fixed, monthly payment while in school. A common flat payment is $25 a month.
Here’s what payments on a $20,000 balance at 6% APR might look like on each of these plans:
| Repayment option | Monthly payment in school | What happens during school | Balance after graduation |
|---|---|---|---|
| Deferred payments | $0 | No payments; interest fully accrues | ~$25,500 |
| Full payment | ~$222 | Covers interest and principal, so your balance steadily decreases | ~$13,400 |
| Interest-only | ~$100 | Covers interest only; balance stays about the same | ~$20,000 |
| Flat payment | $25 | Partially offsets interest; balance grows | ~$24,100 |
Comparing payments after graduation
If you selected a 10-year repayment plan, here’s what your monthly payments might look like after:
| Repayment option | Monthly payment after graduation | Big takeaway |
|---|---|---|
| Deferred payment | ~$283 | Highest payment due to full interest accrual |
| Full payment | ~$149 | Lowest payment overall due to smaller balance |
| Interest-only | ~$222 | Standard 10-year payment on original balance |
| Flat $25 payment | ~$267 | Higher payment from interest buildup |
These examples show why “paying something” during school can still lead to quite different outcomes. Even small in-school payments can help, but whether they truly reduce long-term costs depends on whether they cover interest.
Is it better to defer or put student loans in forbearance?
Deferment is better than forbearance if you have a federal Subsidized Loan because the federal government pays all the interest that accrues while the loan is deferred. In effect, that means interest does not accrue during deferment. During student loan forbearance, interest still accrues, no matter the loan type. (That’s the chief difference between deferment and forbearance.)
Other federal loans (besides Subsidized) and private loans typically earn interest while in deferment. Prioritize Subsidized Loans whenever possible.
How to request a deferred student loan
In-school deferments for federal loans should be automatic if you are enrolled at least half-time, but you should always double-check with your loan servicer. If you haven’t received an automatic in-school deferment, the Federal Student Aid Office advises you to do one of the following:
- Contact your school: Your school needs to report information about your enrollment status to your loan servicer so you can become eligible for in-school deferment.
- Update your enrollment info online: Rather than contact your school, you can simply log into your StudentAid.gov account and update your enrollment info. Your school will then be notified to update your information with your loan servicer.
- Fill out a form: Print and fill out this in-school deferment form, and get it certified by your school. Then submit it to your loan servicer.
If you have a student loan from a private lender, follow its instructions for selecting your repayment option, including deferred payments, if available.
Requesting federal loan deferment for another reason? You’ll need to fill out the proper form:
- Military service deferment request
- Cancer treatment deferment request
- Unemployment deferment request
- Economic hardship deferment request
- Rehabilitation training deferment request
- Graduate fellowship deferment request
Determine your right fit for private student loans with deferment
Counting on private student loans to help cover the full cost of coverage? The private lenders below all offer deferred payment options; read more to find the best fit for you.
Best overall for deferred student loans: College Ave
Why it’s one of the best for deferred payments
College Ave is our overall choice for private student loans for a number of reasons, including low rates and an easy application process; the fact that the lender lets you defer payments until after graduation is just icing on the cake.
- Competitive interest rates
- Easy application
- Flexible repayment, including deferred payments
- Cosigner often needed to qualify
- Long cosigner release period
Loan details
| Fixed rates (APR) | 4.13% – 17.99% |
| Variable rates (APR) | 4.13% – 17.99% |
| Loan amounts | Up to 100% of certified cost to attend |
| Repayment options | Full, interest only, flat ($25/month), deferred |
| Repayment terms | 5, 8, 10, or 15 years |
Best for internship and residency deferment: Sallie Mae
Why it’s one of the best for deferred payments
Sallie Mae has flexible repayment options, including deferred payments, but it’s also noteworthy for its quick cosigner release (in as little as 12 months).
If you’re applying for Sallie Mae’s internship/law clerkship/fellowship/residency deferment, you and an official from the program must complete and submit a deferment form for consideration. If approved, the loan will revert to the same repayment option that applied during the in-school period for up to 12 months. You can apply for and receive a maximum of four 12-month deferment periods.
- Fast cosigner release
- Loans for several educational opportunities
- Flexible repayment, including deferred payments
- No student loan refinancing
- No prequalification options
Loan details
| Fixed rates (APR) | 4.13% – 17.99% |
| Variable rates (APR) | 4.13% – 17.99% |
| Loan amounts | Up to 100% of certified cost to attend |
| Repayment options | Interest only, flat rate ($25), deferred |
| Repayment terms | 10 – 15 years |
Best for long grace period: Earnest
Why it’s one of the best for deferred payments
Earnest offers deferred payments and even extends that deferment with a nine-month grace period (instead of six). Plus, you can skip one payment a year without penalty (but interest still accrues).
- Longer grace period (9 months)
- Skip 1 payment a year without penalty
- Flexible repayment, including deferred payments
- No cosigner release
- Not available in Nevada
Loan details
| Fixed rates (APR) | 4.13% – 17.99% |
| Variable rates (APR) | 4.13% – 17.99% |
| Loan amounts | Up to 100% of certified cost to attend |
| Repayment options | Full, interest only, flat ($25/month), deferred |
| Repayment terms | 5, 7, 10, 12, or 15 years |
Best for rewards while in school: SoFi
Why it’s one of the best for deferred payments
SoFi allows deferred payments until after graduation, but it also offers great rewards while you’re in school to earn you cash and lower your loan balance.
- Cash rewards for good grades
- Rewards available to pay down your loans
- Flexible repayment, including deferred payments
- Lowest rate requires multiple discounts
- Higher starting rates than competitors
Loan details
| Fixed rates (APR) | 4.13% – 17.99%* |
| Variable rates (APR) | 4.13% – 17.99%* |
| Loan amounts | Up to 100% of certified cost to attend |
| Repayment options | Full, interest only, flat ($25/month), deferred |
| Repayment terms | 5, 7, 10, or 15 years |
Best customer service for deferment questions: ELFI
Why it’s one of the best for deferred payments
ELFI allows you to wait to pay until after graduation, but it also earns top marks for its customer service, including the dedicated student loan advisor to help you navigate the whole process.
- Dedicated student loan advisor
- Industry-leading customer service
- Flexible repayment, including deferred payments
- High starting variable rate
- No public info on cosigner release
Loan details
| Fixed rates (APR) | 3.69% – 14.22% |
| Variable rates (APR) | 5.00% – 14.22% |
| Loan amounts | Up to 100% of certified cost to attend |
| Repayment options | Full, interest only, flat ($25/month), deferred |
| Repayment terms | 5 – 15 years |
Best for long repayment after deferment: Ascent
Why it’s one of the best for deferred payments
Ascent offers flexible repayment options, including deferment, a nine-month grace period, and repayment terms up to 20 years.
- Longer grace period (9 months)
- Up to 20-year repayment
- Flexible repayment, including deferred payments
- Higher minimum loan amount
- Tough cosigner and cosigner release requirements
Loan details
| Fixed rates (APR) | 2.89% – 14.41% |
| Variable rates (APR) | 4.34% – 14.75% |
| Loan amounts | Up to 100% of certified cost to attend |
| Repayment options | Interest only, flat rate ($25), deferred |
| Repayment terms | 5, 7, 10, 12, 15, or 20 years |
FAQ
Do student loans require payments while you’re in school?
Many student loans allow you to defer payments while enrolled at least half-time. Federal student loans and many private lenders offer in-school deferment, meaning payments typically begin after graduation and the grace period ends.
How many times can you defer student loans?
You can get student loan deferment extensions as long as you remain enrolled at least half-time at an eligible college or university. Other types of deferment may have limits on the length of time you can defer payment after leaving school.
For instance, you can defer student loan payments for active duty military service, economic hardship, or unemployment for up to three years. Always read the fine print to understand the student loan deferment end date associated with your loan.
Are there student loans with no interest until after graduation?
Most student loans begin accruing interest while you’re in school, even if payments are deferred. The main exception is the federal Direct Subsidized Loan, available to undergraduate students with financial need, which does not accrue interest while you’re in school.
With a Subsidized Loan, the government pays the interest while you’re enrolled at least half-time, during your grace period, and during eligible deferment periods. Because interest does not accrue during these times, it is effectively one of the only student loans with no interest while in school.
Private student loans almost always accrue interest during school, even if they allow you to defer payments until after graduation.
Is there a grace period after graduation for deferred student loans?
Generally, you’ll start paying your student loans six months after graduation if you aren’t making payments while in school. That six-month timeline is called the grace period, and it’s designed to give you time to find a job and get your finances in order when payments kick in.
Recap of private student loan deferment options
Article sources
At LendEDU, our writers and editors rely on primary sources, such as government data and websites, industry reports and whitepapers, and interviews with experts and company representatives. We also reference reputable company websites and research from established publishers. This approach allows us to produce content that is accurate, unbiased, and supported by reliable evidence. Read more about our editorial standards.
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About our contributors
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Written by Timothy Moore, CFEI®Timothy Moore is a Certified Financial Education Instructor (CFEI®) specializing in bank accounts, student loans, taxes, and insurance. His passion is helping readers navigate life on a tight budget.
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Edited by Kristen Barrett, MATKristen Barrett is a managing editor at LendEDU. She lives in Cincinnati, Ohio, with her wife and their pack of senior rescue dogs. She has edited and written personal finance content since 2015.
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Reviewed by Erin Kinkade, CFP®Erin Kinkade, CFP®, ChFC®, works as a financial planner at AAFMAA Wealth Management & Trust. Erin prepares comprehensive financial plans for military veterans and their families.