What is deferment student loan? A deferment is a temporary pause on your federal student loan payments that you can request from your loan servicer. This option lets you stop making payments for a specific period, usually up to three years, if you meet certain conditions. Unlike some other options, a deferment is not automatic, so you must apply and be approved.
During a deferment, you are not required to make payments. However, it is critical to know whether interest will build on your loan during this time. For subsidized federal loans, the government pays the interest during most deferment periods. For unsubsidized loans, you are responsible for the interest that accrues, which can be added to your loan balance later.
How does a student loan deferment work?
When your deferment is approved, your loan servicer will stop billing you for the approved period. This period can last for a specific reason, such as being in school, or for a general economic hardship. You must continue to make payments until you receive written confirmation that your deferment is active.
The application process involves submitting a deferment request form to your loan servicer. You will need to provide documentation that proves you qualify, like an enrollment certificate or proof of unemployment. It is wise to keep copies of everything you send and to follow up to confirm the deferment was processed.
What are the main types of deferments?
There are several situations where you might qualify for a deferment. The most common ones are related to education, unemployment, or economic hardship. Below is a breakdown of the primary categories.
- In-School Deferment: For borrowers enrolled at least half-time at an eligible college or career school.
- Unemployment Deferment: For borrowers who are actively looking for full-time work but cannot find a job.
- Economic Hardship Deferment: For borrowers receiving public assistance or serving in the Peace Corps.
- Military Service Deferment: For active-duty service members during wartime or national emergency.
- Post-Active Duty Student Deferment: For service members transitioning back to school after active duty.
How long can a deferment last?
The length of a deferment depends on the reason you qualified. An in-school deferment lasts as long as you are enrolled at least half-time. Unemployment deferments are typically granted for up to three years total. Economic hardship deferments are also limited to three years total.
Deferment vs. Forbearance: What is the difference?
Many borrowers confuse deferment with forbearance, but they are different tools. The main difference is how interest is treated. In a deferment, the government pays interest on subsidized loans. In forbearance, interest always accrues on all loan types, regardless of subsidy status.
| Feature | Deferment | Forbearance |
|---|---|---|
| Interest on Subsidized Loans | Paid by government (most cases) | Accrues and is your responsibility |
| Interest on Unsubsidized Loans | Accrues and is your responsibility | Accrues and is your responsibility |
| Typical Maximum Length | 3 years (for hardship/unemployment) | 3 years total |
| Application Requirement | Must apply and show eligibility | Must apply and show eligibility |
How do you apply for a deferment?
To apply, you need to contact your loan servicer directly. They will provide you with the correct deferment form for your situation. You can usually find these forms on the official Federal Student Aid website or through your servicer’s portal.
Fill out the form completely and attach the required proof, such as a doctor’s note or a letter from your employer. Submit the form as instructed and keep a record of the submission. It is best to apply well before your next payment due date to avoid a missed payment.
What happens if you miss a payment while waiting?
If you stop paying before your deferment is approved, your loan will become delinquent. This can lead to late fees and a negative mark on your credit report. To avoid this, make at least the minimum payment until you receive official approval.
Key considerations before requesting a deferment
Before you pause payments, consider the long-term cost. If you have unsubsidized loans, the interest that accrues during the deferment will be added to your principal balance. This means you will pay interest on that new amount later, which increases your total repayment cost.
Also, think about your overall repayment timeline. A deferment extends the time you are in repayment, which can delay loan forgiveness or payoff. If you can afford to make smaller payments, an income-driven repayment plan might be a better alternative to a deferment.
Actionable tips for managing your deferment
If you decide that a deferment is right for you, follow these practical steps to protect your finances.
- Always apply in writing and keep a confirmation number or letter.
- Set a calendar reminder to check your deferment end date.
- Consider paying the accruing interest on unsubsidized loans voluntarily.
- Review your loan servicer’s website for the latest forms and deadlines.
In summary, a student loan deferment is a valuable safety net for times when you cannot make payments due to school, unemployment, or hardship. It is not a free pass, as interest may still grow on your balance. Always confirm your eligibility, understand the interest implications, and apply through your servicer to keep your loans in good standing.
Frequently Asked Questions
Can I get a deferment on my private student loans?
Private student loans are not federally regulated for deferments, so you must check with your private lender to see if they offer any forbearance or deferment options.
Do I have to pay interest during a deferment?
For subsidized federal loans, the government usually pays the interest during a deferment, but for unsubsidized loans, you are responsible for all interest that accrues.
How many times can I defer my student loan?
There is no limit on the number of times you can request a deferment, but most types like unemployment or economic hardship have a total maximum of three years per loan.
Will a deferment hurt my credit score?
No, a deferment does not directly hurt your credit score, as long as you are approved and your loan is in good standing before the deferment starts.
Can I stop making payments while my deferment application is pending?
No, you should continue making payments until you receive written confirmation that your deferment has been approved to avoid delinquency.
