If you’re having trouble repaying your loans, you might qualify for a student loan deferment, which can reduce your monthly payment amount or let you postpone payments for a specified period.
The Great Recession ended over a decade ago, yet many Americans are still feeling the impact. In June 2019, Bankrate found that almost half of adults (48%) who experienced the 2007 recession haven’t seen their finances improve, with 23% saying their financial situation is actually worse than it was before.
For student loan borrowers who have struggled with making their payments, this isn’t surprising. And it’s one of the reasons why so many borrowers search for student loan repayment alternatives to make payments easier and more affordable.
But what do you do when everything you’ve tried hasn’t made a difference? If you have federal student loans, one option you may have at your disposal is a student loan deferment.
What is Student Loan Deferment?
Student loan deferment is a federal program that gives you and your lenders the ability to reduce or postpone your student loan payments for a specified time period.
During deferment, any subsidized loans or Perkins Loans you have won’t accrue interest, including the subsidized portions of Direct and FFEL Consolidation Loans. Unsubsidized federal loans, on the other hand, will accrue interest while they are in deferment.
While you can still pay the interest that accrues on unsubsidized loans when they’re in deferment to ensure interest isn’t added to your loan balance after the deferment period has ended, it isn’t a requirement. But it could make your payments a bit higher once your deferment ends.
Ready to talk to a student loan expert about deferment or other repayment options?
How to Qualify for Student Loan Deferment
In order to qualify for student loan deferment, you will need to meet a few requirements. This includes having federal loans that qualify you for the program. Federal student loans that qualify for deferment are:
- Direct Subsidized Loans
- Subsidized Federal Stafford Loans
- Federal Perkins Loans
- Subsidized Direct Consolidation Loans
- Subsidized FFEL Consolidation Loans
- Direct Unsubsidized Loans
- Unsubsidized Federal Stafford Loans
- Direct PLUS Loans
- FFEL PLUS Loans
- Unsubsidized Direct Consolidation Loans
- Unsubsidized FFEL Consolidation Loans
After ensuring your loans qualify, the first step to obtaining a deferment is to request a deferment from your servicer, which typically involves filling out paperwork as part of the application process.
For most borrowers, your servicer will be one of the Department of Education’s approved lenders: Navient, Nelnet, Great Lakes or FedLoan. You can find out your specific lender by logging in to the My Federal Student Aid website.
Student Loan Deferment Eligibility Requirements
As part of filling out paperwork, you’ll be required to state the reasons why your loans should be deferred. Here are the requirements your servicer will look for when deciding whether you’re eligible for student loan deferment:
- You are enrolled in an eligible post-secondary school at least half-time
- You are the parent of someone enrolled in an eligible post-secondary school at least half-time (Direct PLUS & FFEL PLUS Loans only)
- You are enrolled in an approved graduate fellowship program
- You are disabled and enrolled in an approved rehabilitation training program
- You are unemployed or underemployed
- You are experiencing an economic hardship
- You are serving in the Peace Corps
- You are an active duty military service member or have been on active duty within the last 13 months
- You have a Perkins Loan and are working towards cancellation
By meeting these requirements, you may be able to have your loans deferred for six months at a time for up to three years, as long as you remain eligible during that period.
Is a Student Loan Deferment a Good Idea?
Deferring your student loans can give you time to finish school, find a new job, catch up on your finances or complete servicemember duties. But it may not always be your best option. Since deferment only lasts up to three years, you’ll eventually be on the hook for the full balance. This is why changing repayment plans or consolidating your loans may be the better choice.
If you’re having trouble making payments and you don’t expect things to change in the near future, the Department of Education has several income-driven repayment plans available to struggling borrowers. These programs base your monthly payments on your discretionary income, making them more affordable to those who qualify.
Federal income-driven repayment plans include:
- Income-Based Repayment (IBR) Plan
- Income-Contingent Repayment (ICR) Plan
- Pay As You Earn (PAYE) Plan
- Revised Pay As You Earn (REPAYE) Plan
Most people who qualify for these programs will see a substantial decrease in their monthly loan payments. Depending on your income, you might even qualify for a payment as low as $0 a month if your debt-to-income ratio meets certain requirements.
If you’re repaying multiple student loans each month, consolidating your federal student loans could also help you get out of financial trouble. When you consolidate your loans, you combine loan balances into a single loan and a single monthly payment.
Interest on consolidated loans is calculated by weighing the average rate across your existing loans and rounding it up to the nearest one-eighth of 1%. This means your interest rate will be similar to what you’re already paying on your student loans, but you’ll enjoy a simpler repayment process.
In addition to reducing your monthly payments or simplifying repayment, these programs can help you get eligible – or stay eligible – for student loan forgiveness.