- A student loan deferment pauses your payment obligation for up to three years.
- During a deferment, your loan could continue to accrue interest, leading to a higher loan balance.
- Borrowers must meet specific eligibility requirements to get a student loan deferment.
What is student loan deferment?
Temporary pause on payments
A student loan deferment means that you won't have to make any payments for a predetermined period of time. The length of the deferment varies based on your situation.
"It's crucial to understand that deferral is not for everyone," says Michelle Delker, CPA and CEO of The William Stanley CFO Group.
While you won't have to make any payments, you also won't make any progress toward repayment or forgiveness of your student loans. In fact, it's possible that your student loan balance will grow during a deferment because interest may accrue during deferment.
Interest accrual may continue
Depending on the loan type, interest may still accumulate during deferment. During deferment, Direct subsidized loans, subsidized federal Stafford loans, and federal Perkins loans generally don't accrue interest. But Direct unsubsidized loans, unsubsidized federal Stafford loans, and Direct PLUS loans generally do require you to pay the interest that accrues during deferment.
Eligibility requirements
If you have federal student loans, student loan deferment might be possible. But you'll need to meet specific eligibility requirements. These requirements can include the school you attend, your employment status, and a few other factors.
Types of deferment for federal student loans
In-school deferment
If you are enrolled at least part-time at an eligible school, you might qualify for in-school deferment. In some cases, this deferment can extend six months beyond your graduation date.
Unemployment deferment
Student loan borrowers who are receiving unemployment benefits can apply for a deferment. You may also qualify if you are seeking full-time employment but haven't landed a new job. This deferment is available for up to three years.
Economic hardship deferment
If you are facing financial hardships and can't afford your student loan payments, you might qualify for a deferment. In order to qualify, you must meet one of the criteria below:
- You are serving in the Peace Corps.
- You work full-time but earn less than the 150% poverty guideline for your location and family size.
- You are receiving a means-tested benefit, like welfare.
If you qualify for an economic hardship deferment, it can only last for up to three years.
Military service deferment
Active-duty military members who are serving in connection with a war, national emergency, or military operation can request a deferment. The deferment period ends 13 months after you complete your active duty service or enroll in school on at least a half-time basis.
Parent Plus borrower deferment
If you are a parent who took out a Parent PLUS loan to help cover your child's education costs, you can request a deferment while the student is still enrolled on at least a half-time basis.
Rehabilitation training deferment
If you enroll in an approved rehabilitation training program, then you can request a deferment while you complete the program. The training program must be designed to provide alcohol abuse, mental health, drug abuse, or vocational rehabilitation treatment.
Cancer treatment deferment
If you are undergoing cancer treatment, you may qualify for a deferment throughout your treatment. In some cases, the deferment can be extended for six months after your treatment ends.
Graduate fellowship deferment
If you are attending an approved graduate program, then you might qualify for a deferment while in school. In general, this type of deferment is reserved for graduate students in fellowship programs.
How to apply for deferment
If you qualify for a deferment, the next step is to submit a request to your student loan servicer. Each type of deferment has its own request form. For example, if you are seeking an unemployment deferment, you'll submit an unemployment deferment request form.
If your deferment request is approved, your payment obligations will cease. However, it's important to check your deferment status regularly.
"Deferring student loans isn't a one-time decision but requires ongoing maintenance to ensure you stay in deferment and communicate any changes to your situation with your loan servicer promptly," says Delker.
FAQs
No, deferment is not the same as forbearance. It's meant for specific qualifying situations, whereas forbearance is more general financial hardship.
Interest will only accrue on unsubsidized and PLUS loans during deferment. Subsidized loan interest is usually covered during deferment.
No, as long as your account was in good standing before deferment, student loan deferment will not impact your credit score.
Whether or not you can defer your private student loans depends on the lender and your loan terms. Contact your lender for their policy.
If you can't afford your payments after deferment ends, explore income-driven repayment (IDR) plans for potentially lower monthly payments.
