Deferring Payments on Your Student Loan

So far, we’ve examined options for what to do if and when you default on your student loan, so you can rehabilitate it and get back on track.

We’ve also discussed getting to know your student loan, some useful options to help you find more flexibility in repayment, and the various types of student loans and repayment plans.As you can see, just changing your repayment plan can have a huge impact on your ability to take control of your student loan. But there are additional options that you might be able to take advantage of—deferment, which was mentioned earlier, and forbearance, which was not.STUDENT LOAN DEFERMENTStudent loan deferment allows you to press the “pause” button on loan payments. Again, loan servicers typically offer a 6-month grace period after graduating to give new graduates enough time to acquire a position with their new degree.What you might not know is that deferment can be used to address other situations.If you lose your job or have trouble making payments for another qualifying reason, contact your loan servicer. Depending on what your loan stipulates as a qualifying reason, you may get just enough room to breathe to get back on your feet without the extra stress of making loan payments.If you request a deferment, you should probably also consider how to reduce your monthly payments, so that when you resume, you will find it easier to stay current.

APPLYING FOR STUDENT LOAN DEFERMENTApplying for a deferment of your student loan is a straightforward process.Generally, you should use the same steps for both federal and private student loans; however, private lenders decide the exact terms behind deferment policies.First, identify a deferment program that best fits your situation. There are many plans out there. Here’s a short list of the most common:

Economic Hardship Deferment Request: Requires enrollment in some sort of government assistance program.

Parental Leave Deferment Request: Great for soon-to-be or new parents who were enrolled in school for at least six months prior to applying for deferment.

Unemployment Deferment Request: For those who are unemployed, actively looking for employment, and can prove they’re part of an employment agency.

Parent PLUS Borrower Deferment Request: A program specific to parents with students who are attending an eligible school full-time.

In-School Loan Deferment Request: Must be enrolled in one of the listed qualifying schools a minimum of part-time.

Public Service Deferment Request: Must be active duty in one of the branches of the armed forces.

If you belong to a qualifying group, here’s how to apply for student loan deferment:

Call to see if you qualify: Before taking the time to complete paperwork, make a quick phone call to your loan servicer or lender to see if you qualify for deferment. It should only take a few minutes and will save you time.

Download and review the application: Take a few minutes to review the application, so you know what you’re agreeing to. Be clear on the qualification requirements and on any other potentially important details.

Complete and submit the application: Once you’ve taken the necessary precautions, all that’s left to do is complete and submit your application.

Here are some additional tips:

Keep in mind that interest continues to accrue while you’re in deferment unless you have a subsidized loan.

Take a minute to review your current interest rate, whether it will be the same while in deferment, and how much the deferment period will add to your balance in interest. If deferment is not worth it, consider other options.

Remember also that deferment qualifications are upheld by the federal government, so if you qualify, your loan servicer is required by law to approve you.

STUDENT LOAN FORBEARANCEStudent loan forbearance is similar to deferment; however, forbearance differs in one major way:

Deferment is based on the terms of the loan, which you must qualify for.

Forbearance is an unofficial negotiation between you and the lender, typically based on a hardship.

Although these strategies appear to be virtually the same, deferment is entirely dependent upon the terms of your loan, whereas forbearance is not. If you can’t qualify for deferment based on your loan terms, you might be able to negotiate a forbearance to give yourself the time you need. Typically, forbearance is granted for 1-year blocks of time.

‍RECAP: DEFERRING PAYMENTS ON YOUR STUDENT LOAN

Federal student loans allow a 6-month grace period after graduation.
Student loan deferment allows you to pause loan payments for a period of time, as long as you meet certain qualifications.
Student loan forbearance is different. Deferment is based on the loan’s terms, which you must qualify for; forbearance is a negotiation between you and the lender based on a hardship.
Interest continues to accrue while in deferment, unless you have a subsidized loan.