How to Defer Your Student Loan Payments

Student loan deferment offers a temporary pause in required loan payments. This option can provide financial relief during specific life events or periods of economic difficulty. Understanding the deferment process, from eligibility to managing your loan afterward, is important for borrowers. This article guides you through applying for and managing student loan deferment.

Understanding Deferment Options and Eligibility

While payments are paused, interest may or may not accrue, depending on the type of loan you have. For federal student loans, subsidized loans (such as Direct Subsidized Loans and Federal Perkins Loans) do not accrue interest during deferment, as the government pays it. Conversely, unsubsidized loans (like Direct Unsubsidized Loans and Direct PLUS Loans) continue to accrue interest, which can be capitalized, or added to your principal balance, at the end of the deferment period.

Several common types of deferment are available for federal student loans, each with specific eligibility requirements. In-school deferment is automatic for students enrolled at least half-time in an eligible college or career school. If automatic deferment does not occur, contact your school to report your enrollment status.

Unemployment deferment is an option if you are actively seeking but unable to find full-time employment. You may also qualify if you are eligible to receive unemployment benefits. This deferment can last up to three years.

Economic hardship deferment is available if you are experiencing financial challenges. Eligibility criteria include receiving means-tested government benefits (like welfare), working full-time with a monthly income below 150% of the poverty guideline for your family size and state, or serving in the Peace Corps. It can last up to three years.

Other federal deferment types include graduate fellowship deferment, military service deferment for active duty service during a war, military operation, or national emergency, and cancer treatment deferment. Private student loan deferment options are less standardized and vary by lender, so borrowers with private loans should contact their specific lender to inquire about available programs and their terms.

Gathering Information for Your Deferment Application

Applying for student loan deferment requires you to provide specific information and supporting documentation to your loan servicer. You will need to provide personal identification, your loan servicer account number, and current contact information. This ensures your request is processed and linked to your accounts.

The specific documents needed will vary based on the type of deferment you are seeking. For unemployment deferment, you may need to provide proof of unemployment benefits or documentation showing you have made diligent attempts to find full-time work. Economic hardship deferment requires income statements, such as recent pay stubs or tax returns, documentation of your household size, and potentially proof of receiving means-tested benefits. This demonstrates your financial situation relative to poverty guidelines.

For in-school deferment, your educational institution reports your enrollment status to your loan servicer. If automatic deferment does not occur, you might need to obtain enrollment verification from your school and submit it. Military service deferment requires documentation, such as military orders or a statement from your commanding officer.

You can obtain the necessary deferment application forms from your loan servicer’s website or the Federal Student Aid website. Carefully review each section of the form to ensure all required fields are completed accurately, such as income details for economic hardship or enrollment dates for in-school deferment.

Submitting Your Deferment Request

Once you have completed the deferment application form and gathered all the necessary supporting documentation, submit your request to your student loan servicer. Continue making your regular loan payments until you receive confirmation that your deferment request has been approved. Failing to do so could result in your loans becoming delinquent or even going into default.

You can mail your application and documents, or submit them online through your servicer’s portal. Some servicers also accept faxed submissions. When mailing documents, consider using certified mail for proof of delivery. For online submissions, save or print confirmation pages. Always keep copies of all submitted documents for your records.

After submission, expect a confirmation of receipt from your loan servicer. Processing time varies, but servicers communicate their decision, whether approval or denial. If approved, your servicer will notify you of the deferment period and terms. If denied, the servicer will explain the reason, allowing you to explore other options for managing your student loans.

Managing Your Loan During and After Deferment

During a deferment period, understand how interest accrues on your specific loan types. For federal subsidized loans (Direct Subsidized Loans, Federal Perkins Loans, and the subsidized portion of Direct Consolidation Loans), the government pays the interest that accrues, meaning your loan balance will not increase. However, for federal unsubsidized loans (Direct Unsubsidized Loans, Direct PLUS Loans, and the unsubsidized portion of Direct Consolidation Loans), interest will continue to accrue during deferment.

If interest accrues on your loans during deferment, you have the option to pay the interest as it accumulates. Making interest-only payments, even if not required, can prevent the accrued interest from being capitalized, or added to your principal balance, when the deferment ends. Capitalization increases your total loan amount, leading to more interest paid over the loan’s life and potentially higher monthly payments. Stay in contact with your loan servicer, especially if your financial circumstances change or you anticipate needing to extend your deferment.

When your deferment period concludes, your loan repayment will resume automatically. Your loan servicer should provide you with a notification detailing your new payment amount and due date. Confirm these details to avoid missed payments.

If you find yourself still unable to make payments after your deferment ends, options are available. You could explore income-driven repayment (IDR) plans, which adjust your monthly payment amount based on your income and family size, potentially lowering your payments. Update your contact information with your loan servicer to receive all communications regarding your loan status and repayment options.