Do Student Loans Pause if You Go Back to School?

When considering a return to school, individuals often wonder how their existing student loans will be affected. Pausing loan payments while re-enrolled can ease financial burdens during academic pursuits. Whether student loans can be paused, and under what conditions, depends on several factors. These factors primarily include the type of loan—federal or private—and specific enrollment details. Understanding these distinctions helps manage financial obligations during further education.

Federal Student Loan Pauses During Enrollment

Federal student loans offer options to pause payments when borrowers re-enroll in an eligible educational program. This common mechanism is known as an “in-school deferment.” To qualify, borrowers must be enrolled at least half-time at a college, university, or career school that participates in federal student aid programs. This allows temporary suspension of payments during studies.

For many federal loans, such as Direct Subsidized Loans, Direct Unsubsidized Loans, and Perkins Loans, in-school deferment is often automatic. This is because schools report students’ enrollment status to the National Student Clearinghouse, which then notifies loan servicers. When deferment is automatic, borrowers can confirm the status by checking their loan servicer’s online portal or statements. If deferment does not appear to be applied automatically, or for older federal loan types, borrowers may need to manually submit an in-school deferment request form to their loan servicer.

Interest accrual differs during in-school deferment. For Direct Subsidized Loans and Federal Perkins Loans, interest does not accrue during periods of approved in-school deferment. Conversely, for Direct Unsubsidized Loans and Direct PLUS Loans, interest continues to accrue during in-school deferment. This accrued interest is added to the principal balance of the loan when repayment begins, increasing the total amount owed.

Private Student Loan Pauses During Enrollment

Unlike federal student loans, private student loans do not offer standardized or automatic payment pauses when a borrower returns to school. The terms and conditions for private loans are set by individual lenders, and their policies regarding in-school deferment or forbearance can vary widely. Some private lenders may offer options to postpone payments, but these are not as comprehensive or readily available as federal deferments.

Borrowers with private student loans must proactively contact their specific lender to inquire about available options for pausing payments during re-enrollment. These options might include a temporary in-school deferment, forbearance, or other temporary payment arrangements. Ask about eligibility requirements, the application process, and any associated fees or interest implications. Lenders may require documentation of enrollment, such as a school’s verification of attendance.

A key difference for private loans is that interest continues to accrue during any period of approved deferment or forbearance. This means that even if payments are paused, the total loan balance will increase over time due to accumulating interest. Borrowers should consider making interest-only payments during a pause if financially possible, to prevent the loan balance from growing substantially. Understanding the specific terms from the private lender is important before assuming payment relief.

Activating and Managing Enrollment Pauses

Activating and managing an enrollment pause for student loans requires specific steps, depending on the loan type. For federal student loans, borrowers should first verify if an in-school deferment has been automatically applied. This can be done by logging into their loan servicer’s online account or by reviewing recent statements. If the deferment is not active and the borrower is enrolled at least half-time, they will need to submit an in-school deferment request form.

This form is available on the loan servicer’s website or the Federal Student Aid website. Borrowers will need to complete their portion and often have their school certify their enrollment status. Once submitted, follow up with the loan servicer to confirm the deferment has been processed and applied correctly to all eligible federal loans. Keeping records of all communications and confirmations from the servicer is important.

For private student loans, the process is less standardized, requiring direct communication with the lender. Borrowers should contact their private loan lender as soon as they decide to return to school to discuss available options for payment relief. When speaking with the lender, have information ready, such as the school’s name, enrollment status (e.g., full-time, half-time), and anticipated graduation date. Borrowers should specifically ask about the types of deferment or forbearance offered, the application process, and whether interest will accrue during the pause.

Returning to Repayment After Pauses

Once a borrower finishes their academic program or drops below the required enrollment status, student loan payments will resume. For federal student loans, a grace period follows the end of enrollment. This grace period is six months after leaving school or dropping below half-time enrollment, allowing borrowers time to prepare for repayment. During this period, interest may or may not accrue depending on the type of federal loan.

For instance, interest does not accrue on Direct Subsidized Loans during the grace period, while it does accrue on Direct Unsubsidized Loans. After the grace period concludes, federal loan payments automatically resume according to the borrower’s chosen repayment plan. Loan servicers will send notifications about upcoming payment obligations and due dates. Borrowers should ensure their contact information is current with their loan servicer to receive these important updates.

Private student loans, however, have different policies regarding grace periods, which are less common or shorter than those for federal loans. Repayment for private loans may resume sooner after leaving school or dropping below the enrollment threshold, depending on the specific lender’s terms. Borrowers should confirm the exact date their payments will restart and the amount due by contacting their private lender. If financial difficulty is anticipated, reaching out to the loan servicer or lender beforehand to explore options like income-driven repayment plans for federal loans or other temporary arrangements for private loans is recommended.