How Long Can Student Loans Be Deferred?
Understand student loan deferment limits, eligibility, and how to manage your loans during and after a payment pause.
Student loan deferment offers borrowers a temporary pause from making payments on their federal student loans, providing financial relief during challenging circumstances. Its primary purpose is to help borrowers avoid delinquency or default when they face temporary financial difficulties or life events, managing debt without negatively impacting their credit standing.
Types of Deferment and Their Durations
Federal student loan programs offer several types of deferment, each with specific eligibility criteria and maximum durations. One common type is in-school deferment, which typically applies automatically if a borrower is enrolled at least half-time at an eligible college or career school. This deferment generally lasts for the duration of the student’s qualifying enrollment and includes an additional six-month grace period after leaving school or dropping below half-time status. For federal subsidized loans, such as Direct Subsidized Loans and Federal Perkins Loans, interest does not accrue during this period, meaning the government pays the interest. However, interest does accrue on unsubsidized federal loans, like Direct Unsubsidized Loans and Direct PLUS Loans, during in-school deferment.
Borrowers facing unemployment may qualify for unemployment deferment, which can be granted for up to three years. To be eligible, individuals typically need to be receiving unemployment benefits or actively seeking full-time employment. Another option is economic hardship deferment, also available for up to three years, for those experiencing significant financial strain. Eligibility for economic hardship deferment may involve receiving means-tested government benefits, having income below 150% of the poverty guideline for their family size, or serving in the Peace Corps.
Military service members may qualify for a deferment during periods of active duty in connection with a war, military operation, or national emergency. This deferment can last for the duration of the active duty service and for an additional 13 months following its conclusion, or until the service member returns to school at least half-time, whichever occurs first. Cancer treatment deferment is available for the period of treatment and for six months following its completion. Graduate fellowship deferment is offered to individuals enrolled in an approved graduate fellowship program.
Rehabilitation training deferment is another category, available for those participating in an approved program for vocational, drug, mental health, or alcohol abuse rehabilitation. Parents who have taken out a Direct PLUS Loan on behalf of a student can also seek a Parent PLUS borrower deferment while their child is enrolled at least half-time in an eligible school, plus an additional six months after the student ceases enrollment. Private student loan deferment policies vary by lender, and interest almost always continues to accrue on these loans during any payment pause.
Applying for Deferment
Most federal deferments, with the exception of in-school deferment, are not automatically granted and require a borrower request. The first step is to identify your loan servicer, the entity that manages your federal student loans and processes deferment requests. Information about your servicer can typically be found on the Federal Student Aid website.
Once the servicer is identified, borrowers need to gather the necessary documentation that proves eligibility for the specific type of deferment requested. For example, an unemployment deferment may require proof of unemployment benefits or documentation of active job searching. An economic hardship deferment might require income statements or proof of receiving means-tested benefits.
After preparing the supporting documents, the next step involves obtaining and completing the appropriate deferment request form. These forms are typically available on the Federal Student Aid website or directly from your loan servicer’s website. It is important to fill out the form accurately and completely, as any missing or incorrect information can cause delays or even lead to a denial of the request. The completed form, along with all required documentation, must then be submitted to your loan servicer. Borrowers should continue making their regular loan payments until they receive official notification that their deferment request has been approved to avoid delinquency.
Managing Your Loan During and After Deferment
Once a student loan deferment is approved, payments on the loan are temporarily paused. During this period, the loan remains in good standing, and the borrower is not required to make monthly payments. While payments are suspended, it is important to understand how interest accrues, as this can impact the overall loan balance. For federal subsidized loans, such as Direct Subsidized Loans, the U.S. Department of Education pays the interest that would otherwise accrue during the deferment period.
However, for federal unsubsidized loans, including Direct Unsubsidized Loans and Direct PLUS Loans, interest continues to accrue even while payments are paused. Borrowers are responsible for this accrued interest. They have the option to pay the interest as it accrues during the deferment, which can help prevent the loan balance from increasing. Alternatively, if the accrued interest is not paid, it will be capitalized, meaning it is added to the principal balance of the loan when the deferment period ends. This capitalization increases the total amount owed and can result in higher monthly payments once repayment resumes.
When the deferment period concludes, loan payments automatically resume. Borrowers should be aware of their new payment schedule and any changes to their principal balance, especially if interest was capitalized. It is advisable to contact the loan servicer before the deferment ends to confirm the new payment amount and due date. If, at the end of the deferment, a borrower is still unable to make payments, it is important to explore other options immediately. This could include investigating income-driven repayment plans, which adjust monthly payments based on income and family size, or considering a forbearance, another temporary payment pause option.