How Can You Defer Student Loans and Pause Payments?

Student loan deferment offers a temporary pause in repayment obligations for federal student loans. This option can provide relief to borrowers experiencing financial hardship or navigating significant life changes. Understanding the different types of deferment and their associated requirements is a crucial first step toward managing student loan debt effectively. This article outlines eligibility criteria, the application process, financial impacts, and other available repayment relief options.

Types of Student Loan Deferment and Eligibility

Various circumstances can qualify a federal student loan borrower for deferment, allowing a temporary halt in payments. Each deferment type has specific criteria that must be met for approval.

The in-school deferment is common for borrowers enrolled at least half-time at an eligible college or career school. This deferment is often applied automatically based on enrollment reporting from the school. If it does not apply automatically, the borrower should contact their school to ensure enrollment information is submitted to the loan servicer.

Unemployment deferment is available for those actively seeking full-time employment or receiving unemployment benefits. This deferment can be granted for up to three years. To qualify, individuals need to provide evidence of unemployment benefits or demonstrate job search efforts.

Economic hardship deferment assists borrowers facing significant financial challenges. Eligibility is often tied to receiving federal or state public assistance, working full-time with earnings below 150% of the federal poverty guideline for their family size, or serving in the Peace Corps. This deferment also has a maximum duration of three years.

Military service deferment is available for active-duty service members during a war, military operation, or national emergency, with no time limit. A post-active duty student deferment is also available for up to 13 months after qualifying service ends or until re-enrollment. Verification of active duty status or discharge papers are typically required.

A cancer treatment deferment provides relief for borrowers undergoing cancer treatment, lasting for one year and potentially extendable with physician certification. This deferment also includes a six-month grace period after it ends. Graduate fellowship deferment is an option for students enrolled in an approved graduate fellowship program. Documentation from the program confirming enrollment is necessary.

Rehabilitation training program deferment is available for those enrolled in an approved rehabilitation program for vocational, drug abuse, mental health, or alcohol abuse treatment. Parent PLUS Loan borrowers may also qualify for deferment if the student for whom the loan was taken is enrolled at least half-time at an eligible institution, and for an additional six months after the student ceases half-time enrollment.

How to Apply for Deferment

Applying for student loan deferment involves procedural steps after identifying an eligible deferment type and gathering the necessary information. First, contact the loan servicer, the entity managing your federal student loan. Loan servicer contact information is typically found by logging into your account on the Federal Student Aid website.

Once contact is established, the loan servicer can provide the correct deferment application form specific to your qualifying situation. These forms are also often available on the servicer’s website. It is important to accurately complete the form, ensuring all sections are filled out as instructed, including personal details and information related to your deferment eligibility.

Supporting documentation must be attached to the completed application to verify eligibility. Examples include proof of school enrollment, unemployment benefits statements, or military orders. The specific documents needed depend on the deferment type requested.

After preparing the form and documents, submit them to the loan servicer through various methods, including online portals, mail, or fax. Keep copies of all submitted documents and follow up to confirm receipt and processing of the application. Continue making payments until official notification of deferment approval is received, as failure to do so could result in delinquency.

Managing Interest and Repayment After Deferment

Understanding the financial implications during and after a deferment period is important. While deferment pauses monthly payments, interest often continues to accrue, increasing the total loan balance. For Direct Subsidized Loans and Subsidized Federal Stafford Loans, the U.S. Department of Education pays the interest during deferment, meaning interest does not accrue.

However, for Direct Unsubsidized Loans, Direct PLUS Loans, and unsubsidized consolidation loans, interest continues to accrue during the deferment period. If this accrued interest is not paid during deferment, it will be capitalized, meaning it is added to the principal balance of the loan when the deferment ends. This capitalization increases the total amount owed and can raise the overall cost of the loan.

Most federal deferment options have time limits, such as the three-year maximum for economic hardship and unemployment deferments. When the deferment period concludes, the loan servicer will notify the borrower that repayment is set to resume. This notification typically includes the new payment amount and the due date. Borrowers should review their loan terms and prepare for payments to restart.

Plan for repayment by assessing current financial circumstances. If necessary, explore options like income-driven repayment plans to ensure payments remain affordable. Being proactive helps prevent delinquency and financial strain.

Exploring Other Repayment Relief Options

Beyond deferment, other federal student loan relief options exist, especially if deferment is not suitable or sufficient. These alternatives provide different benefits for managing student debt.

Forbearance offers another way to temporarily stop or reduce loan payments, typically granted for up to 12 months at a time, with a cumulative limit of three years for general forbearance. A key distinction from deferment is that interest accrues on all loan types during forbearance, including subsidized loans. This accrued interest will be added to the principal balance when forbearance ends, increasing the total amount owed. Forbearance is often used for short-term financial difficulties, medical expenses, or changes in employment.

Income-Driven Repayment (IDR) plans offer a long-term solution by adjusting monthly federal student loan payments based on income and family size. Payments can be as low as $0 per month, and any remaining loan balance may be forgiven after 20 or 25 years of qualifying payments, depending on the specific plan. While these plans can significantly lower monthly payments, they may result in more interest paid over the loan’s life due to the extended repayment period.

Loan consolidation allows borrowers to combine multiple federal student loans into a single new Direct Consolidation Loan. This simplifies repayment by reducing multiple monthly payments to one. Consolidation can also extend the repayment period, potentially lowering the monthly payment, and may grant access to additional income-driven repayment plans or forgiveness options. The interest rate for a consolidated loan is a weighted average of the original loans’ rates.