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Student Loan Deferment: What It Is and Who May Benefit

Student loan deferment can pause repayment, often for up to three years, if you qualify. If you need a longer-term fix, consider income-driven repayment instead.
May 28, 2019
Loans, Student Loans
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Student loan deferment can pause your monthly loan payments, often for a maximum of three years. Even if you qualify for a deferment, you probably shouldn’t use it unless the following are true:

  • You have subsidized federal loans or Perkins loans — these don’t accrue interest during deferment.
  • You can’t afford to make any payment on your student loans.
  • You’ll be able to restart repayment relatively soon.

If you won’t be in good shape financially for a while, opting for an income-driven repayment plan is a better choice.

How to defer student loans

To defer student loans, you must meet specific eligibility criteria and have deferment time available. You can defer federal student loans only for so long — in most cases, the maximum is three years total.

To apply, send your student loan servicer the appropriate application and any necessary documentation, like proof of unemployment benefits.

To apply, send your student loan servicer the appropriate application and any necessary documentation, like proof of unemployment benefits. Your student loan servicer must grant you a deferment if you qualify, but keep making payments until you’re officially approved.

» MORE: What happens if you miss a student loan payment?

Types of student loan deferment

Here are the most common kinds of federal student loan deferment:

An in-school deferment pauses your loan payments when you’re enrolled in an eligible college or career school at least half-time, as well as six months after you graduate or leave school. Those six months are also known as the student loan grace period.

If you qualify, you should automatically receive an in-school deferment. If you don’t, ask your school’s admissions or enrollment office to send your information to your student loan servicer.

Parent PLUS borrowers can receive a similar deferment while the student using the loan is enrolled at least half-time, but they must request it.

Length: This deferment is available as long as you — or the student benefitting from the loan, for parent PLUS borrowers — are enrolled at least half-time. There’s no time limit.

To qualify for an unemployment deferment, you must be unemployed and doing either of the following:

  • Receiving unemployment benefits.
  • Diligently seeking full-time work, including registering with an employment agency, provided there is one within 50 miles of your home.
  • Length: Most borrowers can receive up to 36 months of unemployment deferment, and you must reapply every six months.

    Any of the following can qualify you for an economic hardship deferment:

  • Receiving state or federal assistance — for example, through the Supplemental Nutrition Assistance Program or Temporary Assistance for Needy Families.
  • Not working full-time and earning a monthly income of less than 150% of your state’s poverty guidelines.
  • Volunteering in the Peace Corps.
  • Length: Most borrowers can receive up to 36 months of an economic hardship deferment, and you must reapply every 12 months if you’re not in the Peace Corps.

    If you’re on active military service, you may be able to postpone your payments with a military deferment. Your service must be related to a war, military operation or national emergency to qualify.

    Length: You’re eligible for this deferment as long as you’re on active military duty. You can also use it for 13 months after your service ends or until you return to school at least half-time — whichever happens first.

    The deferments listed above are the most commonly used ones. But other options exist if you’re in the following circumstances:

  • Enrolled in an approved graduate fellowship program.
  • Enrolled in an approved rehabilitation training program for the disabled.
  • Working toward Perkins loan forgiveness.
  • Receiving treatment for active cancer.
  • Borrowers with balances on federal student loans before July 1, 1993, have additional deferments as well — for example, for working mothers.


    Many private lenders also let you defer student loans while you’re in school or the military. Contact your lender for eligibility details or to find out how to apply.

    Is student loan deferment bad?

    Student loan deferment can be bad — or at least expensive — if you have private or unsubsidized federal student loans. You can find out if your loans are unsubsidized by checking your StudentAid.gov account.

    These loans accrue interest during deferment, and you’ll be responsible for paying it. If you don’t do this while the loan is in deferment, that unpaid interest will be capitalized, or added to your loan balance, when you enter repayment.

    Those extra costs may be worth it if the alternative is having your wages garnished or losing your tax refunds because of a student loan default. Deferment is also a better choice than student loan forbearance — another way to pause repayment — because you always pay interest during forbearance.

    » MORE: Deferment vs. forbearance: Which is right for you?

    Deferment vs. income-driven repayment

    Worried about affording your payments in the long run? Enrolling in income-driven repayment can offer the same immediate relief as student loan deferment, as well as additional long-term benefits.

    • You’ll likely still pay less each month. Many factors contribute to how income-driven payments are calculated. If you’re deferring loans because you don’t earn much money, your income-driven payments could be as low as $0 — essentially the same amount as pausing payments altogether.
    • You can save on interest, too. A big benefit of deferment is not paying interest on subsidized loans. But most income-driven plans also waive those costs if your payments don’t cover accrued interest. This lasts for three years, the same length as unemployment and economic hardship deferments.
    • You’ll potentially earn loan forgiveness. After 20 or 25 years of payments, income-driven plans forgive any remaining balance on your loans. So instead of pausing payments for three years with a student loan deferment, you could pay under an income-driven plan and be that much closer to forgiveness.

    You may pay more interest overall on income-driven repayment because these plans extend your repayment term. Use Federal Student Aid’s Repayment Estimator to calculate the short- and long-term costs to see if an income-driven repayment plan makes more sense for you than a student loan deferment.

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