Can You Defer Student Loans While in Grad School?

Graduate studies often bring financial considerations, especially regarding existing student loans. Many graduate students manage repayment obligations while continuing their education. Understanding options to temporarily pause or reduce student loan payments can provide financial relief, allowing students to focus on academics without immediate payment burdens.

Understanding In-School Deferment

In-school deferment allows eligible student loan borrowers to temporarily postpone federal student loan payments while enrolled in an eligible college or career school. This deferment supports students pursuing higher education by alleviating repayment pressure during studies. To qualify, borrowers typically need to be enrolled at least half-time in a degree-seeking program at an institution eligible for federal student aid.

For federal student loans, in-school deferment often applies automatically when a school reports enrollment data to the National Student Clearinghouse. If deferment does not appear automatically, or for private student loans, a manual application process through the loan servicer may be necessary.

The impact of in-school deferment on interest accrual varies depending on the type of loan. For Direct Subsidized Loans and Perkins Loans, interest generally does not accrue during the deferment period, meaning the loan balance will not increase. Conversely, interest continues to accrue on Direct Unsubsidized Loans and Direct PLUS Loans during in-school deferment. Any unpaid interest on these unsubsidized loans will capitalize, or be added to the principal balance, once the deferment ends, which can increase the total amount repaid over the life of the loan. Private student loans typically accrue interest during deferment periods, and this interest often capitalizes, adding to the principal balance.

Other Deferment and Forbearance Options

Beyond in-school deferment, graduate students may qualify for other forms of payment relief, including additional deferment types and forbearance. Deferment and forbearance both offer temporary payment pauses, but they differ significantly in how interest accrues. Generally, deferment can prevent interest from accumulating on certain federal loans, while forbearance allows interest to accrue on all loan types.

Other federal deferment options include economic hardship or unemployment deferment. Economic hardship deferment may be granted if a borrower experiences financial difficulties, such as earning below 150% of the poverty guideline or receiving public assistance. Unemployment deferment is available for those receiving unemployment benefits or actively seeking full-time employment. These deferments typically last up to three years, requiring documented eligibility.

Forbearance provides another avenue to temporarily suspend or reduce loan payments, usually for up to 12 months at a time, with a total limit of three years for general forbearance. General forbearance is granted at the loan servicer’s discretion, often for reasons like financial difficulties, medical expenses, or changes in employment. Mandatory forbearance must be granted by the servicer if a borrower meets specific criteria, such as participation in a medical or dental internship/residency program. During any period of forbearance, interest will accrue on all federal and private loan types, and this accrued interest will typically capitalize at the end of the forbearance period, increasing the total loan balance.

Applying for Deferment or Forbearance

Requesting student loan deferment or forbearance involves a structured process, primarily through your loan servicer. The first step requires gathering personal identification details and information about your loan servicer. For in-school deferment, you need enrollment verification from your educational institution. For other deferment or forbearance types, documentation supporting eligibility, such as proof of economic hardship or unemployment, is necessary.

After identifying the appropriate deferment or forbearance option, you can obtain the necessary forms directly from your federal student loan servicer’s website or by contacting them. These forms outline the information required and often include sections for both the borrower and, in the case of in-school deferment, an authorized school official to complete. It is important to accurately fill out all relevant sections to avoid delays in processing.

Once completed, forms and supporting documentation must be submitted to your loan servicer. Submission methods include online portals, mail, or fax. Continue making scheduled payments until you receive official confirmation of approval to avoid delinquency. After submission, expect a confirmation receipt and track your application status through your servicer’s online account or by contacting them.

What Happens After Deferment or Forbearance Ends

When student loan deferment or forbearance concludes, repayment obligations resume. Your loan servicer typically sends notifications in advance of the ending date, outlining the return to active repayment. These notices provide time to prepare for monthly payments.

A significant consideration after deferment or forbearance, particularly for unsubsidized federal loans and all loans in forbearance, is interest capitalization. This process adds any unpaid interest that accrued during the pause to your loan’s principal balance. Capitalization increases the total amount you owe and, consequently, the amount of interest that will accrue over the remaining life of the loan.

Your loan servicer will provide a new repayment schedule reflecting your updated loan balance and monthly payment amount. Review this schedule carefully to understand your obligations. Planning ahead for these payments is advisable. If financial circumstances remain challenging, exploring alternative repayment strategies, such as income-driven repayment plans, may be beneficial.