Deferred Federal Student Loans
Deferment is a program that allows you to postpone making payments on your federal student loans. When you defer a loan, it doesn’t mean that the balance on your loan goes away. It just means that you don’t have to make payments while your loan is in deferment.
Deferred federal student loans are a type of loan that let you postpone making payments on your loans as long as you meet certain requirements.
You can defer your federal student loans if you qualify. Deferment is a temporary postponement of payments. It is different from forbearance, which is a temporary reduction in monthly payment amounts and interest accrual. If you don’t qualify for either deferment or forbearance, your loan servicer might be able to consolidate your loans into one loan that has a reduced monthly payment amount and more time to repay. Lastly, cancellation is when the government cancels all or part of your remaining balance on certain types of federal student loans if you work full-time in an eligible public service job after graduating from college (or other qualifying educational institution).
Deferments are available for people who meet certain requirements—these include:
- Being enrolled at least half time in school
- Being unemployed (or underemployed)
When can I defer my loans?
Deferment is available to students who are enrolled in school at least half time, or who qualify for unemployment deferment.
If you’re serving in the military, you may be eligible for deferment by demonstrating that you’re on active duty or serving in a reserve component and will be out of school for the next two years due to military service.
In some cases, if your income falls below 150% of the poverty line (about $17,500 per year), you may be eligible for a full-time student income based on your family size and state of residence. This type of loan will likely only apply if it’s been less than two years since leaving school; otherwise there are other types of relief available (e.g., forbearance).
What are the different types of deferment options?
There are several types of deferment options. Each option requires that you meet certain requirements, such as being in financial hardship or unemployed.
- Financial hardship: You can be eligible for deferment if your monthly payments would create extreme financial difficulty for you and your family. These include medical expenses, increased housing costs, or other extenuating circumstances beyond your control that make it difficult to pay back your loan.
- Unemployment: If you’re out of work due to a layoff, plant closing or strike, you may be eligible for a period of unemployment deferment lasting six months from the date of your last payment on the student loan(s) in question. To qualify for this type of deferment, contact either Navient (for federal loans) or Great Lakes Educational Loan Services Incorporated (for private loans).
- Military service: If you’re serving on active duty in the armed forces during a war declared by Congress or hostilities authorized under Section 516 of Title 10 (10 USC §616), then you may be eligible for military service-related deferments while deployed overseas; these are typically granted up to 36 months but can go up to 60 months depending on how long it takes before returning home after active duty ends (or if there’s reason why such return might not happen). To qualify for this type of deferment/discharge program request form 609e1 – application for military suspension discharge under Title 10 United States Code Section 521a.”
- School closure: If an area experiences extreme weather conditions resulting in school closures due to unsafe conditions like flooding and/or snow storms where classes cannot safely continue at least 15 days straight without interruption due to inclement weather conditions affecting their campus facilities significantly impacting normal operations with no hope whatsoever possible resuming normal operations anytime soon due to damages sustained during those same time frames when schools were closed down indefinitely until repairs could take place successfully completed within some reasonable timeframe later determined appropriate enough so restarts could resume operation smoothly once again
If I’m granted a deferment, what payments do I need to make?
If you have federal student loans, your deferment period will end in one of two ways:
- Your loan servicer will send you a notification that it’s time to start making payments again.
- You’ll be placed into default if you don’t make payments on your loans during the deferment period. If this happens, your loans will go into collections and may be referred to an outside collection agency for repayment.
If you’re granted a deferment, interest on your loan — or any unpaid interest — will continue to accrue until the day before it’s due. At that point, all accumulated interest is added and charged against your balance as though it were principal (the amount borrowed). The same goes for prepayments: When they’re applied toward future installments of principal rather than current ones (for example when applying them toward future monthly payments), they’ll also apply toward additional charges such as late fees or capitalized interest.
If I’m granted a deferment, will the interest on my loans continue to accrue?
If you’re granted a deferment, the interest on your federal student loans will continue to accrue. That’s because it’s not an option to pay off just the principal while leaving the accrued interest untouched. In other words, if you’re granted a deferment, then all of your federal student loans will be making payments—even those that were originally in grace periods and/or deferred status.
The good news is that during this period of time (during which interest is accruing), you won’t have to make payments on your loans even though they’ll be earning interest for themselves by sitting around doing nothing on their own accord! Ahhh…the joys of having government-run student loans…
But don’t get too excited about this deferment business! The bad news is that if you cannot afford to pay off all of those accrued interests when they come due again at the end of each year (and they always do…), then they may very well become capitalized into higher principal balances (which means more money owed).
How do I request a deferment?
If you need to request a deferment, contact your loan servicer. You will need to provide them with your name and social security number. You should also provide them with your contact information so that they can get in touch with you if there are any problems or questions about the deferment. You’ll also need to provide them with most of the information from the section above:
- Your name and address
- Your loan balance and repayment term
- Your monthly income
Before your current deferment ends, contact your loan servicer if you still qualify and want to continue deferring your loans.
Before your current deferment ends, contact your loan servicer if you still qualify and want to continue deferring your loans. Your loan servicer will let you know if you are still eligible for a new deferment based on the following criteria:
- You’re still enrolled in school as of the day before the grace period starts and can pay all outstanding balance after graduation from an eligible institution within 60 days of being notified by your lender that they have processed their final disbursement.
- You have not been discharged from bankruptcy or become ineligible for a discharge (for example, by filing again).
You can postpone payments on some types of student loans.
You may be eligible for a deferment if you are experiencing financial hardship. If this applies to you, contact your lender (the holder of your federal student loans) or the National Student Loan Data System (NSLDS). You’ll need to submit an application that includes information about your income, expenses and other assets. The lender will evaluate your application and let you know whether they approve it or not.
If you’re in school at least half time while receiving a Federal Direct PLUS loan and have received funds under the Health Professions Student Loan Program, the National Health Service Corps Scholarship Program or another program that provides direct loans to students in exchange for future service as an employee of a certain health care entity, then you might qualify for a postponement during periods when school isn’t in session if those programs are designed for full-time study only.
We hope this article has helped you understand the different types of student loan deferments. Keep in mind that if you’re considering a deferment, it’s important to know how long it will last and whether or not you’ll have to pay any interest on your loans while your application is being reviewed by the Department of Education. If you have any questions about deferring payments on your federal student loans, contact us here at Student Loan Hero!