How to Defer Student Loans for Grad School

Student loan deferment offers a way to temporarily pause payments on existing student loans, which can be particularly helpful when pursuing further education like graduate school. This allows individuals to focus on their studies without the immediate burden of loan payments. Understanding the deferment process, including eligibility and application steps, can help manage financial obligations while advancing academic and career goals.

Understanding Deferment Eligibility and Types for Graduate School

In-school deferment is the primary method for postponing federal student loan payments while enrolled in graduate studies. This deferment pauses both principal and interest payments, although the treatment of interest varies by loan type. Eligibility for this deferment generally requires enrollment at least half-time at an eligible educational institution.

Federal student loans, including Direct Subsidized, Unsubsidized, and PLUS Loans (including Grad PLUS), are typically eligible for in-school deferment. Private student loans are governed by their lenders and may offer different deferment options, often requiring direct contact to understand their specific policies.

The definition of “at least half-time” enrollment is determined by each educational institution, generally meaning at least half of a full-time course load. Schools regularly report enrollment status to the National Student Loan Data System (NSLDS), which helps facilitate automatic deferments for federal loans.

When transitioning to graduate school, a six-month grace period on federal Direct Subsidized and Unsubsidized Loans typically applies after leaving undergraduate studies or dropping below half-time enrollment. Direct PLUS Loans often qualify for a similar six-month post-enrollment deferment. While other federal deferment types exist, in-school deferment is the most common for active graduate students.

Gathering Information and Preparing for Deferment Application

Before applying for deferment, identify your loan servicer(s). For federal student loans, you can find your servicer on StudentAid.gov or by contacting the Federal Student Aid Information Center. Different federal loans may have different servicers.

Once your servicer(s) are identified, gather their contact information and the contact details for your graduate school’s financial aid office. You will need to provide personal identifying information, such as your Social Security Number, full name, and current address.

Compile specific details about your loans, including account numbers, found through your servicer’s online portal or on statements. Information about your graduate school, such as its name, address, and anticipated enrollment dates, is also necessary. Confirm your exact enrollment status with your school (e.g., half-time, full-time), as this is a primary eligibility criterion. Many loan servicers provide an “In-School Deferment Request” form on their websites or through StudentAid.gov.

The Deferment Application Process

For federal student loans, in-school deferment is often applied automatically once your school reports your enrollment status to the National Student Loan Data System (NSLDS). The school’s reporting triggers the temporary payment pause. However, it is advisable to confirm with your loan servicer that the deferment has been successfully applied to your account.

If automatic deferment does not occur, or if you have private loans, a manual application process is necessary. Begin by contacting your loan servicer directly through their online portal, by phone, or via mail to request the appropriate deferment form. Complete the deferment request form carefully, providing all the information gathered during your preparation, such as your personal details, loan identifiers, and school enrollment information.

School certification is necessary for manual applications, where your graduate school’s financial aid office confirms your enrollment status. The school may send this confirmation directly to your servicer, or you might need to submit the deferment form to your school for their signature and then forward it. Once complete and certified, submit the form to your loan servicer via online upload, mail, or fax. Monitor your account for confirmation and follow up if you do not receive approval within a few weeks.

Implications of Deferment and Next Steps

During the deferment period, interest accrual varies depending on the type of federal loan. For Direct Subsidized Loans and Federal Perkins Loans, the government pays the interest that accrues while your loans are in deferment, meaning your loan balance will not increase. Conversely, interest continues to accrue on Direct Unsubsidized Loans, Direct PLUS Loans, and FFEL PLUS loans during deferment, and if this interest is not paid, it will be added to your principal balance (capitalized) when the deferment ends. This capitalization increases your total loan amount and the overall cost of repayment.

Deferring payments extends the overall repayment period of your student loans, as the time spent in deferment does not count towards your repayment term. Regularly monitor your loan servicer account and keep your contact information updated to receive important notices about your loan status.

When the deferment period concludes, loan payments will resume. As you approach the end of your graduate program or if your enrollment status changes, consider exploring various repayment options. Income-driven repayment plans, which adjust monthly payments based on your income and family size, can be a viable option. Loan consolidation might also be considered to combine multiple federal loans into a single loan with one servicer and potentially a new interest rate, simplifying repayment.