How to Defer Student Loans

Three Parts:Deciding to Defer Student LoansApplying for DefermentInvestigating Alternatives

Deferment is an option for borrowers who are struggling to make payments on their student loans. If approved you can stop making your payments for a specific period of time to put off, or delay, payments into the future.[1] You must meet certain criteria to qualify for deferment, but fortunately, the process is relatively straightforward. Note that private lenders do not typically offer deferment for any reason, so this guide applies only to The Department of Education, Federal loan deferments.

Part 1
Deciding to Defer Student Loans

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    Understand that deferment is temporary. If you are struggling to make payments on your student loans, you need to recognize that deferment is only a short-term solution. Your loans are not “forgiven,” and you will have to resume making your payments once your designated deferment period is over.[2]
    • Deferment is best for temporary hardships, like losing a job or working through graduate school. If your financial situation is more long-term, you may want to apply for an income-based repayment plan instead.[3]
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    Remember that interest will accrue/accumulate on your unsubsidized loans. During a deferment, the government will cover (not charge) interest on your subsidized loans, but if you have unsubsidized loans (including PLUS loans) interest will be calculated and added to your loan balance. You don’t have to pay that interest during the deferment period, but ultimately, you’ll pay it and more over time. Any interest unpaid during the deferment period will be capitalized (added to your balance), which will result in higher interest payments in the future.
    • You may not be required to pay interest on your loan if you have one of the following loan types:
      • Federal Perkins Loan.
      • Direct Subsidized Loan
      • Subsidized Federal Stafford Loan.[4]
    • If you are unsure how much of your loan balance is unsubsidized, visit the National Student Loan Data System.[5]. This site will give you a complete breakdown of all your federal student loans, and you’ll be able to see which are subsidized and which are unsubsidized.
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    Meet the requirements for an “in school” deferment. While you are enrolled at least half time in college, graduate school, or professional school, you qualify for a deferment. This deferment will last until you graduate, quit the program, or drop below half-time enrollment.
    • Half-time enrollment requirements vary by institution. Check with your school to make sure that you qualify.[6]
    • Inquire about graduate fellowship, internship, and training programs that may also meet the requirements for a deferment. Check with your loan servicer for details.[7]
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    Qualify for deferment based upon income. If you are unemployed or have a part-time job but cannot find full-time work, you can apply to defer your student loan payments until you find adequate employment. If you are experiencing serious financial hardship for other reasons, you may also qualify – check with your lender for specific details. In general, you will be required to show some kind of documentation to qualify for this kind of deferment.
    • The maximum deferment time period is three years. After that, you will again be required to make payments – whether your financial picture has improved or not.[8]
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    Know additional situations that may qualify you for a deferment. The Department of Education offers deferments to borrowers in a few other specific situations. These include:[9]
    • Active-duty military service during a war or national emergency.
    • National Guard service, if you are called to active duty during a war or national emergency.
    • Peace Corps service.
    • Admission to a full-time rehabilitation program for the disabled.[10]

Part 2
Applying for Deferment

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    Continue making your payments during the application process. You are required to make payments until your application is approved; so do not stop just because you think you meet the eligibility requirements. When you receive notice that your deferment has been approved, you can stop making payments for the time period specified.[11]
    • If you are planning to apply for a deferment, contact your loan servicer immediately. This way, if you have to miss payments before your application is accepted, the servicer will know why.[12]
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    Call your loan servicer. Deferment requests must be directed to your loan servicer, not to the Department of Education. It’s a good idea to start by contacting the servicer, talking to a representative, and determining:
    • Whether you actually meet the eligibility criteria for a deferment.
    • What documentation you are required to provide as proof.
    • How long the approval process will take.
    • How long your deferment will last.[13]
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    Contact your financial aid office if you are seeking an in-school deferment or attempting to defer a Perkins loan. In addition to calling your loan servicer, it is sometimes necessary to communicate with your financial aid office.
    • If you need a deferment because you are going back to school, your program’s financial aid office will need to confirm your enrollment with your loan servicer, so it’s important to check in and find out what forms you may need to submit.[14]
    • Perkins loans are administered by individual schools; so if you are trying to defer a Perkins loan for any reason, you’ll need to contact your financial aid office to find out what your school’s requirements are.
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    Provide any necessary documentation. Depending on your particular loan servicer and your specific circumstances, you may need to prove your eligibility for a deferment.[15] This may include the following:
    • If you are claiming unemployment, you may either need to show that you are being paid for a part-time job (show a paycheck, for example) or that you are receiving unemployment checks from the government.
    • If you are claiming financial hardship, you will need to document your low income (you might show proof that you are receiving public assistance).
    • If you are serving in the military or the Peace Corps, you will need to show proof of service.
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    Comply with any other requirements. Your loan servicer may want you to complete application forms and sign them. Make sure you complete whatever process the servicer has in place for deferments.[16]

Part 3
Investigating Alternatives

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    Let your lender know that you are struggling to make your payments. In general, lenders do not want you to go into default. If you inform them of your situation, you may be able to get some help. For example, you may qualify for a consolidation loan, which could reduce your payments by combining two are more loans into one.
    • Contact your loan servicer immediately if you will be late or are unable to make your payments. The more payments you miss before contacting the servicer, the more difficult the problem will become. Don’t let the situation get out of hand if you can possibly help it.
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    Look into forbearance. If you do not qualify for a deferment, you may be able to get a forbearance instead. Like deferment, forbearance allows you to stop making payments temporarily; however, it’s less advantageous because interest continues to accrue whether your loans are subsidized or not and because forbearance lasts for a maximum of one year. Check with your loan servicer if you meet any of the following criteria:[17]
    • Serving a full-time medical or dental internship.
    • 20% or more of your monthly income is the lowest payment for which you qualify.
    • You teach in a school and subject that qualifies for the teacher loan forgiveness program.
    • You are serving in AmeriCorps or a similar volunteer service organization.[18]
    • Always look into getting a deferment before trying to get forbearance.[19]
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    Change your payment plan. If you don’t qualify for deferment or forbearance, you may, at least, be able to lower your payments. Contact your loan servicer to make sure that you are enrolled in the best payment plan for your needs.
    • Persist to find out about applying for any income-based payment plan. Be sure to ask your loan servicer specifically for any repayment plans you hope you might qualify to receive. Get detailed information and how to apply, since some lenders will not tell you about these benefits otherwise.
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    Discharge your loans through bankruptcy. Your final option, if you really can't make your student loan payments, is to file for bankruptcy. However, there is no guarantee that your student loans will be discharged during these proceedings. It is very difficult to prove in court that your student loans are imposing enough of a hardship that they need to be forgiven. You may have a better chance of succeeding in this if you hire a good bankruptcy lawyer.
    • Your chances of success improve if you have excessively high medical bills or a condition that will prevent you from earning income for the foreseeable future.[20]


  • Gaining a deferment or forbearance on your loans will not affect your credit.[21]
  • If possible, pay the accruing interest on unsubsidized loans during your period of deferment. So by arranging to pay the interest voluntarily, at least, your total loan balance will remain the same, as opposed to growing steadily (by avoiding adding the interest to the balance and so not having interest charged upon the deferred interest).

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Categories: Budgeting and Financial Aid for College