What is student loan deferment?

Student loan deferment allows borrowers to temporarily stop making payments on their student loans. Deferment is usually linked to a qualifying event, such as returning to school, serving in the military or becoming unemployed.

During the deferment period, you won’t be required to make payments on your loan, but interest could still accrue. This means that you may come out of a deferment period with a larger balance than before. However, deferment can help ease financial hardship for those who are eligible.

Why would someone want to defer their student loans?

In certain cases, student loan deferment can provide temporary relief from monthly student loan payments, especially when you’re not bringing in income. Almost all borrowers take advantage of automatic deferment while they’re in school, which typically lasts during enrollment and for six months after graduation.

While student loan deferment can be a necessary relief at times, it may not always be the best option for your finances. You could incur thousands of dollars in interest during deferment, making your loan more expensive overall. Even if you qualify for deferment, consider making small or interest-only payments on your loans during that time.

Who qualifies for student loan deferment?

Both private and federal student loans borrowers have options for deferment, but the requirements and details will vary based on the loan type and the lender.

Federal student loan qualifications

There are several federal student loan deferment programs; if you have a federal loan and you fit into any of these categories, you may be able to qualify.

• Current undergraduate student

  If you’re attending college, any federal loans may automatically fall into deferment. Here’s what you need to know:

  • You need to be enrolled in an eligible college, career school or university at least half time to qualify.
  • Your interest may continue to accrue, depending on your loan. If you have a subsidized federal student loan or a Perkins Loan, interest will not accrue.
  • If you have a Direct PLUS Loan, you’ll receive an additional six months of loan deferment after you cease your school enrollment. However, Direct PLUS Loans do carry higher interest rates and origination fees than subsidized and unsubsidized loans.

• Graduate fellowship or residency program

  When applying for a deferment while attending a graduate fellowship program, you must meet the following criteria:

  • The fellowship must be an approved program.
  • You must attend on a full-time basis.
  • The program must provide sufficient financial support for full-time study for at least six months.

• Military service or post-active duty

  If you are currently serving in the military, here are a few things you should consider before applying for a deferment:

  • You may be eligible if you are on active-duty military service in connection in war, military operation or national emergency.
  • You also may be eligible if you’ve completed qualifying service and an applicable grace period.
  • The deferment ends when you resume schooling at least half time with an approved university, college or career school, or 13 months after completing your active-duty service.

• Parent PLUS borrower

  If your child is currently enrolled in school and you took out a Direct PLUS Loan to help with their education, you may be able to receive a deferment.

  • You may qualify if you received a parent PLUS loan and the student benefiting from the loan funds is enrolled at an approved university at least half time.
  • You also may be able to receive an additional six months after the student ceases to be enrolled in school half time.
  • Check with your child’s school to see if you can submit the parent PLUS deferment request when you submit the Direct PLUS Loan request.

• Cancer treatment

  Here’s what you need to know about qualifying for cancer treatment deferment:

  • If you are undergoing cancer treatment, you may be eligible for this deferment.
  • You are also eligible for six months after your treatment ends.

• Economic hardship

  Economic hardship can hit anyone at any time, and deferment may be a good way to find temporary relief. You may qualify for economic hardship deferment if you:

  • Are currently working full time but your earnings are below 150 percent of the poverty guideline for your specific state of residence or family size.
  • Are currently serving in the Peace Corps.
  • Are currently receiving welfare or another means-tested benefit.

  The maximum deferment period is three years for economic hardship.

• Unemployment

  If you are currently unemployed, you may be eligible for unemployment deferment if:

  • You receive unemployment benefits.
  • You’re seeking full-time employment but are unable to find work.

  Borrowers may apply for a maximum of three years of deferment with this program.

• Rehabilitation training

  Here’s what you need to know about rehabilitation training deferment before applying:

  • The rehabilitation training program you’re enrolled in must be licensed, approved, certified or recognized by the Department of Veterans Affairs or a state agency.
  • The program must be designed to provide vocational rehabilitation, drug abuse treatment, mental health treatment or alcohol abuse services.
  • The program must require “substantial commitment” by you to your rehabilitation — meaning it may prevent you from being employed 30 or more hours per week in a position expected to last at least three months.

Private student loan qualifications

If you have a private student loan, deferment options depend on your lender — private lenders are not required to offer deferment. However, most lenders offer some type of deferment or hardship option.

Sallie Mae, for instance, offers deferment if you go back to school or start an internship, residency or clerkship. Earnest offers deferment for students going back to school or entering the military. To find out what your lender offers or to apply for deferment, reach out to your lender directly.

How to apply for student loan deferment

Applying for deferment is different for federal and private student loans. Here’s a breakdown of each and where to find the applications.

Federal student loan deferment application

Few student loan deferments are automatic. Each type has a deferment request form, which you must provide to your loan servicer. You’ll also have to provide documentation proving your eligibility. For example, if you are applying for a graduate fellowship loan deferment, you may need to provide documentation proving that your fellowship is an approved program.

One of the few exceptions to this is if you are currently enrolled in an undergraduate program with federal loans. If you are enrolled in a college, university or career school at least half time, your student loans could be deferred automatically based on your enrollment information. If you are unsure if your student loans have been deferred, contact your school or loan servicer.

Private student loan deferment application

The process depends on your lender if you want to defer your private student loans. You typically can apply directly with your lender on its website. In some cases you may need to apply over the phone.

If you can’t find any deferment information on your lender’s website, contact its customer service department, as the payment relief program may be called something else or handled on a case-by-case basis.

Student loan deferment vs. forbearance

Student loan deferment and forbearance can temporarily postpone student loan payments. However, there are some differences.

With loan forbearance, you can temporarily reduce or halt your loan payments, as with a deferment. However, with forbearance, you will be responsible for paying all of the interest that accrues, regardless of your loan type, while interest is waived for subsidized loans during deferment. Forbearance is more common for students who are not necessarily experiencing a qualifying event but still face financial hardship.

Differences between student loan deferment and forbearance

What to do if you can’t pay or defer your student loans

If you don’t qualify for student loan deferment, you have other options for repaying your loans.

If you have federal student loans, forbearance may be the next-best option. However, applying for income-driven repayment can also be worthwhile if you’re looking for a long-term solution. Income-driven repayment plans are offered by the federal government and can potentially lower your student loan payments based on your income and family size.

Other options for federal student loan borrowers include Public Service Loan Forgiveness, which forgives your remaining loan balance after you work for a public service employer for 10 years, and a Direct Consolidation Loan, which can extend your repayment period to up to 30 years.

Both private and federal student loans may be refinanced, which is when you replace your existing loans with a new one — often with the intent of getting a lower interest rate or monthly payment. Private lenders may also offer their own forbearance options, though you’ll have to contact your lender for specific details.

If you can’t make your monthly student loan payments, finding the right repayment plan should be a priority to avoid defaulting. To determine what option is best for your situation, speak with a financial advisor or your loan servicer. You can also calculate how long it will take to pay off your student loans and figure out how to budget for your payments with a student loan calculator.