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How To Defer Your Student Loan Payments

A recent college student without a job yet, holding his pockets out wondering how to defer his student loan payments

Sometimes life throws unexpected curveballs and we end up with heavy medical expenses, job loss, or some other financial crisis that makes paying off student loans feel impossible. A deferment or forbearance can help you out of this tight spot by postponing your student loan payments for a temporary amount of time. 

What is deferment?

This is a temporary solution for a financial crisis. When you’re deferring payments, you are not required to make those monthly payments until the deferment period is over. However, you are still responsible for any interest that accrues on those loans (except subsidized loans). That unpaid interest will be added to the total borrowed amount and your increased loan amount will accrue more interest — growing the overall payment owed. During deferment, you can make interest payments in order to limit this.

A deferment can give you the time you need to get back on your feet, so you can continue making payments without officially “missing” any. Deferring payments means you are postponing payments and will continue paying them after a set amount of time. Don’t forget to choose a new repayment plan before your deferment ends so you can continue making on-time payments.

 

When is deferment available?

You need to meet the requirements to qualify for deferment. Once you meet these set requirements, you cannot be turned down for deferment. Deferment is available when…  

  • You’re unemployed (working 30 hours or less a week) and searching for full-time employment.
  • Back in school.
  • Actively serving in the U.S. military during a national emergency, war or military operation.
  • You’re having difficulty meeting ends meet. 
  • You’re in rehabilitation training.
  • Actively serving in PeaceCorps.
  • You’re in a graduate fellowship program.

 

What is forbearance?

If you do not qualify for deferment, forbearance can be a good option. However, forbearance must be approved by your lender or service. This time limit is also set by your lender, servicer, or set regulations. 

Regardless of the loan type, you are ultimately responsible for the interest that accrues during forbearance. Similar to deferment, all accrued interest during the forbearance period will be added to the amount borrowed, and this new loan amount will generate MORE interest. Likewise, you may make interest payments during forbearance in order to limit the amount that will be added to your total. Therefore, it is a good idea to use as little forbearance as possible, so it’s available in the future. 

Not sure how you plan to pay back your student loans? See what your options are!