Student loan deferment allow you to pause your payments for a specific period of time - for specific reasons.
It's no surprise that student loans become a burden in repayment. They arelingering monthly payments that seemingly goes toward nothing. Because of this, they are often one of the first payments to be missed, or to let slide into delinquency.
Even though student loan programs have generous repayment options, you can still default on them, and student loan lenders do report to credit bureaus.Student loans can hurt your credit score just like any other type of loan!
If you find yourself in a situation where you are unable to make your monthly payments on time, then you should immediately contact your loan servicer. This will allow you to explore all of the options available to you, and ensure that you choose the option that is best for you.
The student loan deferments and forbearances available to you also depends on the type of loan that you have. Here are your options for the most common student loan types.
FFEL/Direct Stafford/PLUS Loan Deferment Options
You will need to contact your loan servicer to request your deferment or forbearance options for these loans. If you are in repayment, you should already be receiving monthly statements from your servicer, but if you are not sure who your servicer is, then you can to find out on MyStudentAid. This database is also a great resource for keeping track of all of your student loans and managing your repayment plan.
When your loans are disbursed, they are automatically placed into an in-school deferment period. This means that as long as you are enrolled at least half-time in school, your loan payments will be postponed. Once you graduate or separate from your school, you will have a six-month grace period, and then your repayment will begin.
At this point, you can explore a few options of further postponing your payments.
Here's a list of the most common types of deferment.
In-School Deferments
If you graduate with a bachelor'sdegree and plan to continue on toward a master's or other professional degree, then you can apply for an additional in-school deferment on your student loan.
Simply contact the registrar's office for a verification of enrollment, and submit this to your lender. If you are already repaying your loans and decide to go back to school, you can apply using the same process.
Economic Hardship Deferment
If you are experiencing economic hardship and are unable to repay your student loans then you can apply for a deferment based on that situation.You may be eligible for up to a three-year deferment if your economic situation does not improve. In this economic climate, this is something to consider.
It is important to note, however, that if you have a subsidized Stafford Loan thenyour interest will also be deferred during your deferment. If you have an unsubsidized Stafford Loan or a PLUS loan, then your interest will continue to accrue during your deferment, and it will be added, or capitalized, to your total loan amount when you begin repayment again.
A deferment also must meet strict guidelines set forth by the Department of Education. They are the official governing body on student loan deferments.
Economic Hardship Forbearance
If you are unable to qualify for a student loan deferment based on the federal guidelines, then your lender may be willing to grant you a forbearance, or a temporary stop in your monthly payments. This can only last up to 12 months, and the same rules apply to paying the interest as with a deferment.
However, you can repeat the process three times for a total of 36 months.
Military Service Deferment
To be honest, I wish that all active duty soldiers serving more than five years would have their student loans forgiven. The military has a generous tuition assistance program, but I still wish they could do more. However, if you are active duty then you can apply for a deferment which will postpone your payments while you fulfill your military obligations.
Full List Of Deferments
Perkins Loans
A Perkins Loan is also a federally subsidized student loan, but it is one that is issued by your school, and it is repaid directly to your school. Many schools use a third-party servicer to manage their repayment so you may actually send your monthly payments and deferment requests through that servicer.
The same deferments apply for Perkins Loans as they do for a Stafford Loan, except Perkins Loan deferment decisions can be made by either your school or their third-party servicer.
Private/Alternative Loans
There are less federal regulations surrounding private or alternative student loans, but the deferment process works the same. You will simply contact your lender for your private loans and request a deferment. Private loans do not have subsidized options, so you will always pay the interest, or have the interest capitalized, during a period of deferment.
Your private loan lender will be able to work with you on temporarily postponing your payments, and starting your student loan deferment to help you avoid late payments or a loan default.
Have you ever applied for a student loan deferment program?
FAQs
If you're enrolled in an eligible college or career school at least half-time, in most cases your loan will be placed into a deferment automatically. You have the option to opt out of an automatic in-school deferment if you'd like to continue making payments.
Which of the following are reasons that a deferment is granted on a student loan? ›
Each type of deferment has specific eligibility requirements and forms.
- Cancer Treatment Deferment. ...
- Economic Hardship Deferment. ...
- Graduate Fellowship Deferment. ...
- In-School Deferment. ...
- Military Service and Post-Active Duty Student Deferment. ...
- Parent PLUS Borrower Deferment. ...
- Rehabilitation Training Deferment. ...
- Unemployment Deferment.
If you can't pay anything, deferment may provide some breathing room until you restart payments. Deferment is considered a temporary measure. If you need a long-term lower payment, then an income-driven repayment (IDR) plan may make more sense.
How many classes do I need to take to defer student loans? ›
You must be enrolled at least half-time for “In-School” deferment purposes (a minimum of 6 credits each semester as an undergraduate student or 3 credits as a graduate student).
What are 2 ways to postpone repayment of a student loan? ›
Student loan deferment and forbearance
- Loan deferment - Payments are postponed. In most cases, the interest money you owe will continue to accrue (grow).
- Forbearance - Payments are suspended or reduced but the interest you owe continues to accrue.
USDA mortgage guidelines for student loans
If your student loans are deferred, in forbearance or you're on an income-based repayment plan, however, your lender is required to factor in 0.5 percent of your remaining student loan balance, or whatever the current payment is within your repayment plan.
How do you write a reason for deferment? ›
How to write a gap year deferral letter to a university
- Get Specific. While different colleges will have different requirements for a letter to defer admission, you'll want to get as specific as you can in the text. ...
- Talk About the Why. ...
- Go For Quality Over Quantity. ...
- Don't Worry If Things Change.
Disadvantages of a Deferment Period
- During the deferment period, interest is being accrued.
- The overall loan balance is increased due to accrued interest.
- In some cases, borrowers are subject to additional fees.
- The borrower must prove they are experiencing financial hardship.
It may be to travel, to take a break, to study, or to work.
What are the risks of deferring loan payments? ›
While the deferred payments themselves may not negatively impact your credit score, the interest that continues to accrue during the deferment period can increase your loan balance. The higher loan balance can affect your credit score since your debt utilization will increase.
For loans made under all three programs, a general forbearance may be granted for no more than 12 months at a time. If you're still experiencing a hardship when your current forbearance expires, you may request another general forbearance. However, there is a cumulative limit on general forbearances of three years.
What are the pros and cons of a deferment? ›
Pros and Cons of Loan Deferment
| Pros | Cons |
|---|
| Paused or reduced payments | Might extend your repayment term |
| Interest is suspended on some types of loans (e.g., subsidized federal student loans) | Interest may continue growing on the loan while it's in deferment |
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In-school deferment: Borrowers may automatically qualify for in-school federal deferment simply by enrolling at least half-time at an eligible school. Parent PLUS borrowers may also be eligible for deferment if the student for whom they took the loan enrolls at least half-time at an eligible school.
Does deferring student loans hurt credit? ›
A student loan deferral doesn't directly impact your credit score since it occurs with the lender's approval. Student loan deferrals can increase the age and the size of unpaid debt, which can hurt a credit score. Not getting a deferral until an account is delinquent or in default can also hurt a credit score.
How long can I put my student loans in deferment? ›
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.
What is the biggest difference between deferment and forbearance? ›
Both deferment and forbearance allow you to temporarily postpone or reduce your federal student loan payments. The difference has to do with interest accrual (accumulation). During a deferment, interest doesn't accrue on some types of Direct Loans. During a forbearance, interest accrues on all types of Direct Loans.
Who is eligible for economic hardship deferment? ›
Eligibility Requirements
To be approved for an economic hardship deferment, you must have a qualifying federal student loan and meet one of the following requirements: You are currently receiving means-tested benefits such as Temporary Assistance for Needy Families. You are serving in the Peace Corps.
How do you qualify for forbearance? ›
How to get mortgage forbearance
- Contact your mortgage servicer to request forbearance.
- Give a concise, factual explanation of your financial hardship.
- Tell your servicer whether you can make a partial monthly payment and, if so, how much.
- Tell your servicer how many months of forbearance you are requesting.
