How to Get a Student Loan Deferment

How to Get a Student Loan Deferment

Student loan deferment offers a temporary pause in repayment obligations for federal student loans. This option provides financial relief during specific life events impacting a borrower’s ability to make regular payments. Deferment allows individuals to suspend monthly loan payments, helping them navigate challenging circumstances.

Eligibility Criteria for Deferment

Eligibility for student loan deferment is tied to specific circumstances recognized by federal regulations. One common reason is enrollment in an eligible college or career school at least half-time, known as in-school deferment. Federal student loans often qualify for this deferment automatically while a borrower is enrolled. Unemployment deferment is typically available for up to three years if the borrower is actively seeking full-time employment.

Economic hardship deferment can also provide relief for up to three years. This applies to borrowers receiving certain means-tested government benefits or whose income falls below 150% of the poverty guideline for their family size. Military service deferment is available for individuals on active duty in the U.S. Armed Forces, including members of the National Guard and Reserves during specific operations. Post-active duty deferment may also be available for a period after service concludes.

Deferment options extend to those undergoing cancer treatment, covering the period of treatment and an additional six months afterward. Individuals enrolled in an approved graduate fellowship program or a rehabilitation training program designed for vocational, mental health, or substance abuse treatment may also qualify. Parents with Direct PLUS Loans can receive deferment if the student for whom the loan was taken out remains enrolled at least half-time.

A significant distinction among deferment types involves interest accrual. For federal subsidized loans, the government generally pays the interest that would otherwise accrue during the deferment period. This means the loan balance does not increase while payments are paused. Conversely, interest continues to accrue on unsubsidized federal loans, including Direct Unsubsidized Loans and Direct PLUS Loans, during deferment.

Required Information and Documentation for Deferment Applications

Before initiating a deferment request, borrowers must gather specific information and documentation to support their eligibility. Loan servicers provide the necessary deferment forms, which are typically accessible on their websites or through direct contact. Accurately completing these forms with precise details is important, as missing or incorrect information can delay processing.

The required documentation varies depending on the type of deferment being sought. For an in-school deferment, borrowers will need an enrollment verification form completed by an authorized school official. This verification must include the dates of attendance, enrollment status such as half-time or full-time, and the school’s Office of Postsecondary Education Identification (OPE-ID) number. For unemployment deferment, proof of unemployment benefits or evidence of actively seeking full-time employment may be required.

Economic hardship deferment applications necessitate documentation of income, such as copies of recent pay stubs or signed federal tax forms like the 1040. Pay stubs should be consecutive, dated within the last 90 days, and clearly show gross pay and pay frequency. Proof of receipt of means-tested government benefits can also support an economic hardship claim. For military service deferment, official military orders or documentation on military letterhead serve as verification.

Individuals applying for cancer treatment deferment will need to provide medical records or a statement from a medical professional confirming their treatment. Similarly, those seeking a graduate fellowship or rehabilitation training deferment must submit a letter from an authorized official, such as a program director, confirming their enrollment, program details, and relevant dates.

The Deferment Application Process

Once all necessary information and documentation are prepared, submit the deferment application to the loan servicer. Borrowers typically have several submission options, including mailing completed forms and supporting documents directly or using online portals for electronic submission.

It is advisable to make copies of all submitted forms and documents for personal records before sending them. When mailing, consider a method that provides tracking, such as certified mail, to confirm delivery and ensure a record of submission.

Upon submission, anticipate a processing period, which can vary depending on the servicer and request complexity. It is important to continue making scheduled loan payments until official notification of deferment approval is received. Stopping payments prematurely, before approval, could lead to the loan becoming delinquent. Loan servicers typically provide confirmation via email or mail once the deferment has been processed and approved. If questions arise or additional information is needed, they will generally reach out directly. Borrowers can check the status of their submitted application by contacting their loan servicer.

Loan Status During and After Deferment

When a student loan deferment is approved, the status of the loan changes with distinct financial implications. For unsubsidized federal loans, interest continues to accrue throughout the deferment period. Borrowers are responsible for this accrued interest. They have the option to pay the interest as it accumulates, or they can allow it to be capitalized, which means the unpaid interest is added to the principal balance of the loan when the deferment ends. Capitalization increases the total amount owed and can result in higher monthly payments once repayment resumes. This also extends the overall loan term, as a larger principal balance will take longer to pay off.

As the deferment period approaches its end, the loan servicer will typically notify the borrower that payments are about to resume. This notification provides essential details regarding the date payments are due again and the updated payment amount. Borrowers should be prepared for their repayment obligations to restart at this time, following their original or an adjusted repayment schedule. If financial hardship continues, borrowers may explore the possibility of applying for another deferment if eligible, or investigate other available repayment options.