A deferment student loan is a temporary pause on your federal student loan payments. During this time, you are not required to make payments, and in most cases, interest does not accrue on subsidized loans. This option can help you if you are facing financial hardship, going back to school, or serving in the military.
How Does Student Loan Deferment Work?
When you receive a deferment, your loan servicer allows you to stop making payments for a set period. The length of the deferment depends on the reason you qualify. For example, a deferment for economic hardship can last up to three years, while an in-school deferment can last as long as you are enrolled at least half-time.
For subsidized federal loans, the government pays the interest that accrues during the deferment. For unsubsidized loans, interest continues to accrue, and it will be added to your total loan balance if you do not pay it during the deferment period.
Types of Deferment
There are several types of deferment available for federal student loans. The most common ones include:
- In-school deferment for students enrolled at least half-time
- Economic hardship deferment for those with low income or receiving public assistance
- Unemployment deferment for those actively seeking full-time work
- Military service deferment for active duty or national guard service
- Cancer treatment deferment for those undergoing treatment
Each type has specific eligibility requirements and application procedures. You must apply for a deferment through your loan servicer, and you may need to provide documentation to prove your eligibility.
Eligibility for Deferment
To qualify for a deferment, you must have a federal student loan in good standing. You cannot be in default. Additionally, you must meet the specific criteria for the type of deferment you are requesting. For example, for an economic hardship deferment, your income must be below a certain threshold or you must be receiving certain public benefits.
Private student loans are not eligible for federal deferment programs. However, some private lenders may offer their own forbearance or deferment options, but these are not guaranteed and may have different terms.
How to Apply for a Deferment
To apply for a deferment, contact your loan servicer directly. You can find your servicer’s contact information by logging into your account on the Federal Student Aid website. You will need to complete a deferment request form, which is specific to the type of deferment you are seeking.
Make sure to submit your application before your next payment due date. If you are already in default, you may not be eligible for a deferment, and you should explore other options like loan rehabilitation.
Deferment vs. Forbearance
Many borrowers confuse deferment with forbearance, but they are different. Deferment is often better because interest does not accrue on subsidized loans. Forbearance also pauses payments, but interest always accrues on all loans, including subsidized ones.
Here is a quick comparison:
| Feature | Deferment | Forbearance |
|---|---|---|
| Interest on subsidized loans | Paid by government | Accrues and is added to balance |
| Eligibility | Specific reasons (school, hardship, etc.) | Financial hardship, illness |
| Length | Up to 3 years for hardship, varies for others | Up to 12 months at a time, max 3 years |
| Application | Form required | Form required |
In general, deferment is the better option if you qualify, because it can save you money on interest.
Impact on Credit and Loan Forgiveness
Deferment does not negatively affect your credit score. In fact, it can help you avoid missed payments, which would hurt your credit. However, it is important to note that deferment does not count toward loan forgiveness programs like Public Service Loan Forgiveness (PSLF) unless you are in a qualifying employment situation and meet other conditions.
If you are pursuing PSLF, you must make 120 qualifying payments while working full-time for a qualifying employer. Deferment periods generally do not count as qualifying payments, except for certain military service deferments.
Actionable Tips for Managing Deferment
If you are considering a deferment, here are some tips to help you manage the process:
- Apply as soon as you know you need it—do not wait until you miss a payment.
- Keep records of all documents you submit to your loan servicer.
- If you have unsubsidized loans, consider making interest payments during the deferment to avoid capitalization.
- Set a reminder to reapply if your deferment is about to expire.
Frequently Asked Questions
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In summary, a deferment student loan is a valuable tool for pausing payments temporarily, especially if you have subsidized loans. It is important to understand the different types, eligibility, and how to apply. Always contact your loan servicer for the most accurate information and to discuss your specific situation.
Frequently Asked Questions
What is a deferment student loan?
A deferment student loan is a temporary pause on your federal student loan payments, usually for a specific reason like going back to school or financial hardship.
How long can I defer my student loans?
The length depends on the type of deferment; for example, economic hardship deferment can last up to three years, while in-school deferment lasts as long as you are enrolled at least half-time.
Does interest accrue during a deferment?
For subsidized loans, the government pays the interest during deferment, but for unsubsidized loans, interest accrues and may be added to your balance if you do not pay it.
Can I get a deferment on private student loans?
Private student loans are not eligible for federal deferment, but some private lenders may offer their own forbearance options.
How do I apply for a student loan deferment?
Contact your loan servicer and submit a deferment request form, along with any required documentation, before your next payment due date.
