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Student Loan Deferment and Forebearance Options

How Do I Postpone My Student Loan Payments?

You may be able to put off paying your student loans with a deferment or forbearance.
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How Do I Lower My Student Loan Payments?
 
Avoiding Student Loan Default

Updated: 2020-12-23 by

When you graduate from college, you usually won't have to start paying your student loans immediately. Most student loans include an automatic grace period of at least six months. But after that grace period ends, there are just two ways to delay student loan repayment -- deferment or forbearance.

Getting a deferment or forbearance can be a life saver if you have explored options for reducing your payments and still find yourself unable to meet your financial obligations. Still, you should use these postponement tools sparingly and with a full understanding of how they work. In many cases, interest will continue to accrue during a deferment or forbearance, and this can dramatically increase the amount you will have to pay later.

Student Loan Deferment

Certain life situations -- such as unemployment or returning to school -- may temporarily excuse you from paying your federal student loans. If you qualify for a deferment, you can postpone payment on both the principal and interest of your loans. In some cases, the federal government will even pay the interest for you. In other situations, interest continues to accrue during the deferment period.

During a deferment, the government may pay the interest on:

  • Perkins Loans
  • Direct Subsidized Loans, and
  • Subsidized Stafford Loans.

You will have to pay the interest on unsubsidized or PLUS loans. If you can, you should continue to make these interest payments during the deferment period. Otherwise, the government will add the accrued interest to the balance of your loan (this is called "capitalization") and your future payments will be higher. To see how capitalized interest can mount up and affect your loan balance, use FinAid's Cost of Interest Capitalization calculator.

Following are some common types of deferment:

  • at least half-time enrollment in school
  • unemployment
  • economic hardship
  • military service
  • study in an approved graduate fellowship program
  • study in an approved rehabilitation training program for the disabled

If you have federal Perkins loans, you may qualify for additional deferment benefits.

To qualify for a deferment, your loan can't be in default, and you must meet specific requirements for your type of loan. 

For more information or to apply for a deferment, contact your loan servicer or visit the U.S. Department of Education website. If you have a private student loan, read your loan contract and contact your loan servicer to see whether you have any options for deferment.

Student Loan Forbearance

A forbearance allows you to postpone or reduce your federal student loan payments for a set period of time. It is often easier to get a forbearance than a deferment -- for example, you may qualify even if your loan is in default -- but it will most likely cost you more. Interest always accrues during a forbearance; when that interest is capitalized, your loan balance will shoot up. (As mentioned just above, you can use FinAid's Cost of Interest Capitalization calculator to see how capitalized interest can affect the balance of your loans.)

That said, forbearance can be an important tool if you are in over your head. For example, if your student loans are delinquent but not yet in default, obtaining a forbearance will stop the clock on the delinquency period. That delays default and buys you some time to work out other strategies for dealing with your loans.

You may qualify for a forbearance if:

  • you are in poor health
  • you are facing financial hardship
  • your monthly payments are more than 20% of your monthly gross income
  • you are serving in a medical or dental internship
  • you are serving in a national service position for which you received a national service award
  • you are a teacher and your service would qualify you for teacher loan forgiveness
  • you qualify for partial repayment of your loans under the U.S. Department of Defense Student Loan Repayment Program, or
  • you are a member of the National Guard and have been activated by a governor, but you don't qualify for a military defermtent.

For more information or to apply for a forbearance, contact your loan servicer or visit the U.S. Department of Education website. If you have a private student loan, read your loan contract and contact your loan servicer to see whether you have any forbearance options.

If You Don't Qualify for Deferment or Forbearance

If you're having trouble paying your loans and you don't qualify for a deferment or forbearance, you may have other options, including reducing your monthly payments. To learn more, see "What If I Can't Pay My Student Loans?"

 

How Do I Lower My Student Loan Payments?
 
Avoiding Student Loan Default

You may also be interested in:

  • How Do I Lower My Student Loan Payments?

    There are many options for relief from student loan debt, depending on what kind of loans you have, when you took them out, and your current financial situation.

  • Avoiding Student Loan Default

    Tips on managing your student loan repayment --and avoiding the serious consequences of defaulting on your loans.

  • How to Get Help With Student Loan Problems

    If you run into hassles with your student loan -- lost payments, harassment from bill collectors, or other serious annoyances -- here are some ways to deal with them.

Useful Web Resources

Student Loan Borrower Assistance (SLBA)
www.studentloanborrowerassistance.org

This website from the National Consumer Law Center offers a wide variety of resources to help you handle student loan problems

Consumer Financial Protection Bureau (CFPB)
www.consumerfinance.gov

CFPB can help you make the right choices about paying for college and understand your options for paying back student loan debt

Self-Help Packets in English and Spanish (Student Loan Borrower Assistance)
www.studentloanborrowerassistance.org

Student loan self-help packets to help you with your federal student loans, from SLBA

Public Service Loan Forgiveness (U.S. Department of Education/FSA)
studentaid.gov

If you have a public service job, you may eventually be able to cancel your federal student loans

Postponing Repayment (Student Loan Borrower Assistance)
www.studentloanborrowerassistance.org

Sound advice on deferment and forbearance from the SLBA.

Economic Hardship Deferment Self-Help Packet (Student Loan Borrower Assistance)
www.studentloanborrowerassistance.org

A downloadable booklet to help you understand and apply for an economic hardship deferment.

Economic Hardship Deferment Calculator (FinAid)
www.finaid.org

This calculator can help you figure out whether you qualify for an economic hardship deferment.

Cost of Interest Capitalization Calculator (FinAid)
www.finaid.org

Learn how interest accrued during deferment or forbearance can affect the total balance of your loan.

Deferment and Forbearance (U.S. Department of Education/FSA)
studentaid.ed.gov

The official page for information about student loan deferment and forbearance

Grace Periods (Student Loan Borrower Assistance)
www.studentloanborrowerassistance.org

Tips to help you understand and manage the grace period on your student loan

Ex-Students With 'Income-Based' Loan Payments Face Crushing Tax Bill
www.nbcnews.com

The Obama administration proposed changing the tax code to exempt the forgiven debt from taxes, but the provision did not make it into the final budget agreement passed by Congress and signed by President Obama in December.

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