Student Loan Deferment: Everything You Need to Know
Student loan deferment can be a godsend to those struggling to make their monthly payments. In fact, it’s estimated that over 6 million Americans are currently on student loan deferment. But what is a student loan deferment and how to get one? In this article, we will explore the realities of student loan deferment and what it could mean for you if you decide to pursue it.
When you can’t make your student loan payments, deferment is an option that allows you to temporarily postpone or reduce your payments. This can be a helpful way to ease your financial burden if you are experiencing financial hardship or unemployment.
To qualify for a student loan deferment, you must first contact your loan servicer and request one.
If you are approved for a deferment, it’s important to keep in mind that interest will continue to accrue on your loans during this time.
What Is a Student Loan Deferment?
If you are struggling to make your student loan payments, you may be able to get a deferment or forbearance on your loans. This means you can temporarily stop making payments or reduce your monthly payment amount for a limited time.
Deferment is usually available for federal student loans, while forbearance is available for both federal and private student loans.
To qualify for a deferment, you must meet certain requirements set by your lender. For example, you may be able to get a deferment if you are unemployed, enrolled in school at least half-time, or experiencing economic hardship.
How Do Student Loan Deferments Work?
There are a few different types of student loan deferments, but the most common is the economic hardship deferment. This type of deferment is available to borrowers who are experiencing financial difficulties, and it allows them to temporarily stop making payments on their loans.
To qualify for an economic hardship deferment, borrowers must submit documentation that proves their hardship. This could include proof of unemployment, underemployment, or a decrease in income. Once approved, the borrower’s payments will be deferred for a set period of time, usually six months to a year.
During a deferment, interest will continue to accrue on the loan. However, if the borrower has a subsidized loan, the government will pay the accruing interest during the deferment period.
When the deferment period ends, borrowers will need to begin making payments again. If they are still experiencing financial difficulties, they may be eligible for another deferment or forbearance.
Who Can Qualify for Student Loan Deferment?
When it comes to student loan deferment, there are a few different types of loans that may be deferred. For federal student loans, there are two main types of deferment: an in-school deferment and an economic hardship deferment.
In order to qualify for an in-school deferment, you must be enrolled in at least half-time coursework at an eligible college or university. You can also qualify if you are participating in an approved graduate fellowship program or rehabilitation training program for the disabled.
If you are not able to make your student loan payments due to financial difficulties, you may be eligible for an economic hardship deferment. To qualify, you must be experiencing unemployment, underemployment, or economic hardship. You may also qualify if you are participating in a government-sponsored program designed to bring you out of economic hardship.
How to Apply for Student Loan Deferment
Applying for loan deferment needs to be done in a proper way. You will need to contact your loan servicer to see if you qualify for a deferment or forbearance. Depending on your situation, you may be able to apply online.
Here is how to apply:
- Contact your servicer or your school Financial Aid Office
- Provide the needed documentation
- Fill out paperwork
- Wait for the answer
Federal Student Loan
Federal student loans can be deferred if you meet certain criteria. For example, you may be able to defer your loan if you are enrolled in school at least half-time, or if you are unemployed or unable to find full-time work. You may also be able to defer your loan if you are serving in the military or performing certain types of community service.
Keep in mind that while federal student loans can be deferred, interest will continue to accrue on the unpaid balance. This means that when the deferment period ends, you will owe more than the original loan amount. If possible, make payments on the interest during the deferment period to reduce the amount of interest that accrues.
Private Student Loan
Private student loans may or may not have a deferment or forbearance option, and the rules vary among lenders. Contact your loan servicer as early as possible if you want to explore your options.
In today’s time, a lot more private student loan providers offer some form of relief if you are enrolled in school, serving in the military, or unemployed. Some also provide deferment for economic hardship.
As with federal loans, any deferment of a private loan comes with accrued interest that is added to the end of the deferment period.
What’s the Difference Between Student Loan Deferment and Forbearance?
When it comes to student loans, there are a lot of different terms and options that can be confusing. Two such terms are deferment and forbearance. But, what is the difference between the two?
Deferment is when you temporarily postpone making payments on your loan. This can be helpful if you are going through financial hardship or returning to school. Forbearance, on the other hand, is when you make reduced payments or don’t make any payments at all for a period of time.
It’s important to note that both deferment and forbearance will extend the length of your loan and increase the amount of interest you pay over the life of the loan.
Should You Defer Your Student Loan?
When it comes to student loans, there is no one-size-fits-all answer. The best way to decide whether or not to defer your student loan is to carefully consider your unique circumstances.
If you are struggling to make your monthly loan payments, deferring your loan could give you some much-needed breathing room. Keep in mind, however, that deferring your loan will likely result in you paying more interest over the life of the loan.
On the other hand, you can ask your lender to make changes and see if you can get lower monthly payments instead of getting deferred payments.
Ultimately, the decision of whether or not to defer your student loan is a personal one. Make sure to weigh all of your options and make the decision that’s right for you.
Alternatives to Student Loan Deferment
There are a few alternatives to student loan deferment that borrowers can consider. These include:
- Forbearance
- Loan consolidation
- Student loan refinancing
- Military service deferment
- Hardship deferment
Make sure that you do the needed research and see which one would suit you better. Also, check for which one you qualify for.
Bottom Line
In case you are struggling to make your student loan payments, deferment might be the right solution for you. Here we discussed more what student loan deferment is and what it means.
So, if you were wondering how to defer student loans, in this article you will find all the needed information about it. Make sure that you do the needed research first before making a decision. We wish you luck.
