Guide to Student Loan Deferment

By Kaitlin Hurtado on March 25, 2020

College may be all fun and games (or, not at all) until you have to accept student loans. Whether it is to pay the steep price of tuition or to help out on household costs (groceries, car payments, gas, and rent), it is anything but uncommon for a student to take on student loans. Forbes reports that the student loan debt is about $1.56 trillion in 2020, consisting of 45 million borrowers. It is the second-highest consumer debt category after mortgage debt in the United States.

The average student loan debt is $32,731, and the average student loan payment is $393. Sound too high? For many students, it is.

That’s where student loan deferment comes in, which allows a borrower to temporarily stop making payments on their student loans. Each person’s student loan situation is different, from interest rates to repayment plans, everyone can choose a student loan repayment plan that fits their needs best. Student loan deferment is the same – not all deferments have the same requirements.

While on student loan deferment, you may still be required to make interest payments or you may be able to opt-out on interest payments (which will be added to your loan’s principal balance). Want more information? Lucky for you, Uloop has a helpful guide to give you the low-down on student loan deferments.

student loan deferment

Photo: Pexels

How Can You Get a Deferment?

If student loan deferment seems like something that you really need, you may be wondering how you can get it. Contact your lender directly to see what your options are. Each person’s situation is different, so the options available to a friend or family member may not be available to you, or, you may have more options to choose from than they do.

Deferments are not a one-stop decision. Once you start the process of getting a student loan deferment, you have to submit an application before actually stopping payments on your student loan. The typical application for student loan deferment consists of a form that documents your reasoning for deferment (like unemployment documentation) and details of your student loan(s). Private lenders also allow student loan deferment depending on the situation, so if you think it is the best option for you, don’t hesitate to ask.

student loan deferment

Infographic by Kaitlin Hurtado

Are You Eligible for a Studen Loan Deferment? 

While you may think student loan deferment is your best option, not everyone is eligible for student loan deferment. Federal student loans have the clearest rules on eligibility, loans that offer deferment options include Perkins Loans, Direct Subsidized, and Unsubsidized Loans, PLUS Loans, FFEL Loans (including FFEL PLUS_), and Direct and FFEL Consolidation Loans.

If you’re still in school, you may be able to qualify for student loan deferment if you are enrolled at least half-time — your payments would start after graduation. Typically referred to as in-school deferment, these are automatically applied, and the deferment will last six months past your graduation date (your student loan grace period).

Typical eligibility requirements include at least one of the following:

  • You’re currently enrolled in school at least half-time in an eligible institution
  • You’re currently unemployed or experiencing economic hardship (maximum of three years)
  • You’re actively serving in the military, including the 13-month period following service
  • You’re participating in approved rehabilitation programs for people with disabilities
  • You’re participating in a career-related internship or residency program
Different Types of Deferment 
Unemployment deferment applies if you are currently receiving unemployment benefits or diligently seeking full-time work (registering with an employment agency near you) while being actively unemployed. Once approved for an unemployment deferment, you must apply every six months.
Economic hardship deferment applies to those currently receiving state or federal assistance, not working full-time, or earning a monthly income of less than 150% of your state’s poverty guidelines. For this type of student loan deferment, you must reapply every 12 months if you are not serving in the Peace Corps.
If you’re on active military service, you may be able to postpone your payments with military deferment. Similar to in-school deferment, this type of deferment will apply as long as you’re on active military service and you should have a grace period of 13 months after your service ends.
While these are the most common types of student loan deferment, they aren’t the only kinds of loan deferment. You can also qualify for student loan deferment if you are:
  • Working toward Perkins loan forgiveness
  • Enrolled in an approved rehabilitation training program for the disabled
  • Currently receiving cancer treatment (deferment period includes your treatment period and six months after your treatment ends)

Just because you are facing economic hardships doesn’t mean you will automatically be eligible for student loan deferment. Make sure to talk to your loan servicer to see all your plans, including income-driven repayment plans and loan forgiveness.

What Payments (If Any) Are You Expected to Pay? 

Student loan deferment doesn’t necessarily mean you get to stop all and any payments toward your student loans. If you have subsidized loans, the government will pay your interest coasts so that your loan doesn’t grow during your deferment period.

If you have unsubsidized loans, you are still responsible for interest costs. You can pay interest costs each month as you would for your monthly loan payments, this option allows you to prevent your total loan repayment costs low over a longer period of time. Or, you can add interest costs to your total loan amount, making the balance grow every month.

Student loan deferments don’t last forever — the maximum is three years total.

How Do You Know if Student Loan Deferment Is The Right Option For You?

Everyone’s situation is different when it comes to student loans. There’s a lot of variables to consider: interest rates, type of loan, current career/employment status, monthly income, and longterm plans. You may be asking yourself, “So when is student loan deferment the right option for me, if at all?”

Financial stability isn’t something that everyone has, so if you know you are financially struggling due to unemployment or a very low monthly income, student loan deferment might be the option you will want to turn to.

It is important to remember that student loan deferment isn’t the end-all option — it won’t magically make all your financial struggles go away. Many stress that student loan deferment should be as temporary as possible. With a maximum of three years to student loan deferment, people advise choosing student loan deferment when you know you can pick up payments as soon as possible.

While not having to meet monthly payments on your student loans may bring you an ease of mind, it is also important to remember that you may still be getting interest during deferment, making your principal student loan balance higher. What seems like a financially viable option right now may not be the same in the future when you have to pay a larger sum over the total period of time. If you are still unsure about what option is best for you, consult your lender or a financial advisor on what options work best for you and your plans specifically.

student loan deferment

Photo: Pexels

Are There Other Options Out There?

Maybe you’re thinking you’re not eligible or that student loan deferment isn’t the best option out there for you. Don’t fret, there are still options out there to choose from. Talk to your loan servicer to help you get the best option for your situation, including:

  • Income-driven repayment plans: Instead of having a fixed monthly payment, you can shift your payments over an extended period and lower your payments based on your income. This may mean a higher overall balance due to interest being added in, but you may also have your loan balance forgiven after a certain number of years.
  • Forbearance: This is similar to deferment where you can temporarily suspend payments, especially if your monthly payments are taking up a large chunk of your income. Interest will continue to be charged on all loans, subsidized included.
  • Loan Consolidation: Consolidating debts may result in lower payments, especially if you opt for a longer repayment period. This can also result in higher overall interest costs.

Income-driven repayment plans are often recommended over student loan deferment. They may not be stopping your payments altogether but can provide just as much help. Because they are based on your income, if you are earning a very low monthly income, you can be paying very low monthly payments on your student loans — even as low as $0. Some income-driven repayment plans can also waive interest costs you’re currently worried about. Likewise, you also still have the option of earning loan forgiveness in the future. After 20-25 years of payments (or 10 if you work in public service), income-drive plans forgive the remaining balance on your loans.

Forbearance does have similarities with student loan deferment, but there are also significant differences. Both paths are temporary solutions. Student loan deferment has a maximum period of three years, while forbearance only lasts for 12 months maximum. Both options are also available for most federal loans (Stafford, PLUS and Perkins Loans) but private lenders may not offer the options to you depending on your situation. Both are not automatic – you can’t submit an application and stop paying. Make sure you are making payments until you are officially approved for either — you don’t want to be delinquent or default on your loans. If you have not made a payment on your loans in 270 days — currently default on your loans — you are not eligible to apply for both deferment and forbearance.

Whether or not any of the options mentioned sound like something that’s right for you, be sure to make every payment until your loan servicer notifies you of changing your account. Missing payments, whether intentional or not, can damage your credit and lead to fees.

While the idea of getting a break from your student loan payments may sound like a dream, it is not always the best option. You likely will end up paying more, in the long run, the longer you spend in deferment/not paying interest costs, so be sure to cover all your options.

If you are looking for more help on student loans, check out these Uloop articles:

  • What to Know About Student Loan Forgiveness: This article details what you need to know about student loan forgiveness, from choosing specific careers that will jumpstart student loan forgiveness to how you may be able to reach student loan forgiveness after 20 to 25 years of payments.
  • 3 Sure-Fire Tips to Pay Off Your Student Loans in a Timely Fashion: Need student loan tips but not enough time to sift through lengthy guides? This article breaks it down into 3 quick tips to get you strategizing your student loan repayment plans.
  • How to Navigate the Process of Finding and Accepting Student Loans: Maybe you are not completely done with school and still in need of financial aid to carry you to the end of your academic journey. This loan helps you navigate the process of getting student loans from filling out your FAFSA to knowing which student loans to accept.
  • 3 Things to Know About Refinancing Your Student Loans: Student loan deferment is not your only option. This article helps you learn about refinancing your student loans, such as making your interest rates lower.
  • 8 Resources to Use When You’re Confused About Student Loan Terms: You can read article after article about student loans and still be none the wiser if they are all full of terms that you have no idea what they actually mean. This guide gives you eight different resources to help you learn various student loan terms. These aren’t just “here are five terms,” but full glossaries. Happy learning!

By Kaitlin Hurtado

Uloop Writer
Hello! I'm Kaitlin, a fourth year Literary Journalism major at UC Irvine. I'm a writer on Uloop's national team and a campus editor for UCI.

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