You may fall on hard times and it feels like paying back your student loans is impossible. Thankfully, you have options to postpone your payments for a while until you get back on track. Student loan deferment, along with forbearance, allows you to postpone your payments for a while and also keep the loans in good standing.
The 7 Types of Student Loan Deferment
1. In-School Student Loan Deferment Request
If you’re enrolled half-time at an eligible college or career school, then you may be eligible to defer your loans. This applies for students who have a Direct PLUS Loan or FFEL PLUS Loan as a graduate or a professional student for the six months after you aren’t enrolled anymore.
2. Unemployment Deferment Request
If you’re currently unemployed or unable to find full-time employment, you may qualify for up deferment of up to three years.
3. Economic Hardship Deferment Request
If you’re facing economic hardship or serving in the Peace Corps, then you may apply.
Economic hardship is defined as you work full-time and the total amount of your monthly payments on all of your federal education loans in repayment is equal to or larger than 20% of your monthly income. Also, after deducting the total amount of your monthly payment on your federal education loans in repayment from your monthly income, the amount remaining is less than 220% of the Federal Minimum Wage Rate or the Poverty Line income for a family of two for your state (regardless of your family size).
4. Parent PLUS Borrower Deferment Request
If you’re a parent who has a Direct PLUS Loan or a FFEL PLUS loan and the student with the loans is enrolled at least half-time at an eligible school, then you can apply. This extends to the six months after the student isn’t enrolled half-time any longer.
5. Graduate Fellowship Deferment Request
Are you in a graduate fellowship program? You may qualify. Check out a list of fellowship programs here.
6. Military Service and Post-Active Duty Student Deferment Request
Being on active duty military service in connection with a war, military operation, or national emergency will qualify you. You can also qualify if you have this type of deferment for the 13 month period following the end of that service or until you return to school on a half-time basis (they look at whatever happens earlier).
7. Rehabilitation Training Program Deferment Request
Approved rehabilitation training programs for the disabled, like training for interpreters for the Deaf-Blind program, may make you eligible for deferment. The purpose of these types of programs is to make sure that skilled personnel are available to serve the needs of the disabled population.
Private Student Loan Deferment
Federal loan servicers are obligated to follow a set of protections for loan recipients, but private student loan lenders aren’t held to those same standards. Therefore, the options available to you as a private student loan borrower will vary based on who your lender is. Many will allow borrowers to postpone payments until the six months after graduation or leaving school, but interest will accrue in all cases. If your lender gives you the option of making small or interest-only payments while you’re in school, that can help to keep your interest from growing into a big surprise later on.
Some lenders like SoFi offer unemployment protection so you can apply for a 12-month forbearance when you’re laid off without cause. Laurel Road offers up to a year of forbearance, but not every situation will qualify. CommonBond allows you to forbear for up to 12 months due to economic hardship. Aside from these fintech lenders, bigger banks like Citizens Bank offer deferment if you’re returning to school. Wells Fargo will also allow you to defer while you’re in school and for up to 6 months after graduation.
The ability to get a deferment depends entirely on your lender and the loans you have. If you’re struggling to make your private loan payments, contact your servicer to to find out how they can help. They should explain in clear terms exactly what will happen with your interest and principal balances so you don’t end up in even more debt than before. You can find some more options for dealing with private student loans here.
How To Defer Student Loans
Student loan deferment is not automatic. You usually have to submit a request to your loan servicer via a form specific to why you are requesting a deferment. You’ll also need to prove that you meet the eligibility requirements by providing documentation such as your pay stubs.
If you’re enrolled in an eligible college or career school at least half-time, then your loan will be deferred automatically and your loan servicer will inform you of this. You should contact the school where you’re currently enrolled if this does not happen. Your school will then send information about your enrollment so your loans can be deferred.
It’s important that you continue making payments on your student loans until you find out that your deferment request has been granted. If you stop paying and your loans aren’t deferred, then you can go into default.
Student Loan Deferment Forms
To apply for a deferment use one of the following forms depending on your deferment request
- In-School Deferment Request Form
- Unemployment Deferment Request Form
- Economic Hardship Deferment Request Form
- Parent PLUS Borrower Deferment Request
- Graduate Fellowship Deferment Request Form
- Military Service & Post-Active Duty Student Request Form
- Rehabilitation Training Program Deferment Request Form
Am I Eligible for a Student Loan Deferment?
Eligibility is based on the types of loans you have as well as your reason for deferment. For example, if you qualify for an economic hardship request, then you may qualify for up to 3 years of deferment on your loans.
Also, if you qualify for any of the following circumstances, then you may be eligible for deferment:
- You’re enrolled in college or another higher educational institution at least half-time
- You’re studying in an eligible graduate program or approved rehabilitation training program for disabled people
- You’re unemployed or unable to find full-time employment
- You qualify for Perkins Loan discharge or cancellation
- You’re on active duty, have returned from active duty and 13 months or less has passed or you’re returning to school on a half-time basis and
- You’re a member of the National Guard or another reserve department
- You were called or ordered to active duty while enrolled at least half-time or within six months of being enrolled at least half-time
You may also be eligible if you received a Direct Loan or a loan from the FFEL Program that was distributed before July 1, 1993 and you are:
- Teaching where there is a teacher shortage
- Working in public service
- A working mom
- A new parent
- Temporarily disabled
Want to check your eligibility for a deferment? Contact your loan servicer and explain to them why you need the deferment. They should then grant it to you based on your specific situation and eligibility.
What Happens to Loans During Deferment?
Deferment may pause interest from accruing on your loans, which is crucial to avoiding paying off an even greater balance after the deferment period ends. This interest accruement is the main difference between deferment and forbearance.
The US Government pays the interest on your loan during deferment for the following loans:
- Federal Perkins Loans
- Direct Subsidized Loans
- Subsidized Federal Stafford Loans
Other loans would require that you pay back interest that accrues during a deferment period, including all unsubsidized federal student loans or PLUS loans. You would not be responsible for paying the interest while you are in the deferment, but the interest will capitalize and be added onto your principal balance that would need to be paid back once your deferment period is finished.
What Types of Loans Accrue Interest During Deferment?
| During deferment, you are generally not responsible for paying the interest that accrues on the following loan types: | During deferment, you are responsible for paying all interest that accrues on the following loan types: |
|---|---|
| Direct Subsidized Loans | Direct Unsubsidized Loans |
| Subsidized Federal Stafford Loans | Unsubsidized Federal Stafford Loans |
| Federal Perkins Loans | Direct PLUS Loans |
| Subsidized portion of Direct Consolidation Loans | Federal Family Education Loan (FFEL) PLUS Loans |
| Subsidized portion of FFEL Consolidation Loans | Unsubsidized portion of Direct Consolidation Loans |
| Unsubsidized portion of FFEL Consolidation Loans |
Is Student Loan Deferment Right For You?
Follow these steps to find out how to determine if you need deferment or forbearance on federal loans:
- If you have subsidized federal student loans or Perkins loans, then you should consider deferment first. Your loans won’t accrue interest in deferment.
- If you expect your financial hardship to be temporary, then you can pause payments through deferment or forbearance (if you qualify).
- If you expect your financial hardship to last for a while, then you should apply for income-driven repayment. This will tie your monthly payment amount to your earnings and your loans will be forgiven after 20 or 25 years.
- For your private student loans talk directly to your lender for your options. Most lenders have forbearance programs.
When Income-Driven Repayment Might Be a Better Solution
If you expect your financial hardship to last a while, then an income-driven repayment(IDR) plan may be a better option. There are a few options, including Income-Based Repayment, Pay-As-You-Earn, and Revised-Pay-As-You-Earn. Each of these repayment plans have interest forgiveness as well as complete loan forgiveness after 20-25 years depending on the repayment plan and your student loans. They could also offer payments as low as $0.00 per month. So if you expect your financial hardship to last awhile, it may very well benefit you more to be in an IDR instead of a deferment.
You can use our Student Loan Interest Forgiveness Calculator to figure out how much interest forgiveness you may receive in each of the repayment plans.
Deferment, Forbearance and Income-based Repayment Comparison
| Forbearance | Deferment | Income-Driven Repayment | |
|---|---|---|---|
| Temporarily Postpones Payments | Sets payments based on income (can be zero if borrower does not earn enough) | ||
| Interest Forgiveness | (Note: this is only on subsidized portion of loans) | ||
| Can Work for Private Student Loans (in limited cases) | |||
| Counts Toward End of Term Loan Forgiveness | |||
| Long-term Solution |
Does Deferment Affect Credit?
While your loans are in deferment, they will appear as current on your credit report. Not paying on your student loans while in a deferment does not negatively impact your credit score if you were approved for the deferment prior to when you stopped making payments.
Is Deferment A Good Solution?
Deferment is a good short-term solution to a financial hardship that you expect to be temporary. If you’re having trouble paying your loans and expect the circumstance to continue for an extended period of time, then deferment is probably not the best option. You may end up accruing more debt if you defer for a long period of time. You can seek out other options such as an income-driven repayment plan in order to make your payments manageable. Always contact your loan servicer if you’re having trouble making your payments on time and discuss the situation with them. Not sure what types of federal loans you have? Here is how to find out your student loan balance and servicers.
