Student loan deferment is a temporary pause on your monthly loan payments, granted under specific circumstances. When you receive a deferment, you are not required to make payments for a set period, and in many cases, interest does not accrue on subsidized federal loans. This option can provide relief during financial hardship, further education, or military service, but it is important to understand how it works before you apply.
How Does Student Loan Deferment Work?
During a deferment, your loan servicer agrees to suspend your payment obligation for a defined time. You must apply for deferment through your loan servicer, and you need to meet eligibility criteria. The key difference between deferment and forbearance is that interest may not accrue on certain federal loans during deferment, making it a more favorable option.
For federal student loans, there are several types of deferments, including economic hardship, unemployment, in-school, and military service deferments. Each has its own rules and application process. Private student loans may offer deferment options, but terms vary by lender, and interest typically continues to accrue.
Types of Deferment
- In-school deferment for students enrolled at least half-time
- Unemployment deferment for those actively seeking work
- Economic hardship deferment for low-income earners
- Military service deferment for active-duty service members
- Post-active-duty deferment for recent veterans
Who Is Eligible for Student Loan Deferment?
Eligibility depends on the type of loan and the reason for deferment. For federal loans, you may qualify for an in-school deferment if you are enrolled at least half-time at an eligible school. Unemployment deferment is available if you are receiving unemployment benefits or are unable to find full-time work.
Economic hardship deferment applies when you are receiving public assistance, serving in the Peace Corps, or earning an income below a certain threshold. Military service deferment is available for active-duty service members, and post-active-duty deferment covers the 13 months following your service.
Which Loans Qualify?
Most federal student loans, including Direct Subsidized and Unsubsidized Loans, PLUS loans, and Federal Family Education Loans (FFEL), are eligible for deferment. However, the interest subsidy—where the government pays interest during deferment—only applies to subsidized loans. For unsubsidized loans, interest continues to accrue and will be added to your principal balance if unpaid.
Private student loans are not eligible for federal deferment programs. You must contact your private lender directly to ask about hardship options, which are not guaranteed. Always read your loan agreement to understand the terms.
How to Apply for Student Loan Deferment
To apply for a deferment, you need to contact your loan servicer and submit a deferment request form. The form requires documentation such as proof of enrollment, unemployment status, or income information. It is essential to keep making payments until your deferment is approved to avoid default.
Once approved, your servicer will notify you of the deferment start and end dates. You may need to reapply periodically, especially for economic hardship or unemployment deferments, which are typically granted in 12-month increments.
Deadlines and Timelines
| Deferment Type | Maximum Duration | Renewal Required? |
|---|---|---|
| In-school | While enrolled at least half-time | No, but must reapply if enrollment changes |
| Unemployment | Up to 3 years | Yes, every 6 months |
| Economic hardship | Up to 3 years | Yes, every 12 months |
| Military service | While on active duty | No, but must provide orders |
| Post-active-duty | 13 months after service | No |
What Happens to Interest During Deferment?
For subsidized federal loans, the government pays the interest that accrues during deferment, so your balance does not grow. This makes deferment a smart choice if you qualify. For unsubsidized loans, interest accrues during deferment, and if you do not pay it, it capitalizes (gets added to your principal), increasing your total debt.
Private loans almost always accrue interest during any deferment, and interest may capitalize. To minimize the impact, consider paying the interest as it accrues, even if you are not required to make full payments.
Actionable Tips for Managing Deferment
- Apply early—don’t wait until you miss a payment.
- Keep copies of all forms and documentation for your records.
- Set a reminder to reapply if your deferment requires renewal.
- If possible, make interest payments during deferment to avoid capitalization.
Deferment vs. Forbearance: What’s the Difference?
Deferment and forbearance both allow you to pause payments, but they differ in interest treatment. Deferment is generally better because interest may not accrue on subsidized loans. Forbearance always accrues interest on all loan types, and it is often easier to obtain but more costly in the long run.
If you have a choice, always opt for deferment if you qualify. Forbearance should be a last resort because it increases your total debt. Check with your servicer to see which option you are eligible for.
Does Deferment Affect Credit Score or Loan Forgiveness?
Deferment does not directly harm your credit score, as long as you make payments on time before and after the deferment. However, it does not count as a qualifying payment for Public Service Loan Forgiveness (PSLF) or income-driven repayment (IDR) forgiveness. Only active repayment counts toward these programs.
If you are pursuing PSLF, you may want to avoid deferment and instead use an income-driven repayment plan with a $0 payment, which can count toward forgiveness. Deferment pauses your progress, so consider your long-term goals before applying.
What to Do If Your Deferment Is Denied?
If your deferment request is denied, you have the right to appeal. Contact your loan servicer to understand the reason and provide additional documentation. You can also request forbearance as a temporary solution while you reapply.
If you are struggling to make payments, consider income-driven repayment plans, which can lower your monthly payment based on your income. These plans can also lead to forgiveness after 20 or 25 years. Always explore all options before letting your loans go into default.
Summary
Student loan deferment is a valuable tool to pause payments during tough times, but it is not automatic—you must apply and meet eligibility criteria. Understand the interest implications, especially for unsubsidized and private loans, and weigh the impact on loan forgiveness programs. Always stay in contact with your loan servicer and keep your loans in good standing to avoid default.
Frequently Asked Questions
How long can I defer my student loans?
Deferment periods vary by type, but common limits include up to three years for unemployment and economic hardship, while in-school and military deferments last as long as you meet the criteria.
Does student loan deferment count toward loan forgiveness?
No, deferment periods do not count as qualifying payments for Public Service Loan Forgiveness or income-driven repayment forgiveness.
Will I have to pay interest during deferment?
On subsidized federal loans, the government pays interest during deferment, but on unsubsidized loans and private loans, interest accrues and may be added to your balance.
Can I get a deferment if I am unemployed?
Yes, you can apply for an unemployment deferment if you are receiving unemployment benefits or are unable to find full-time work, and it can last up to three years.
How do I apply for student loan deferment?
You apply by contacting your loan servicer, submitting a deferment request form, and providing required documentation like proof of enrollment or unemployment status.
