How to defer student loans to pause your payments for months or years at a time

Melanie Lockert

Jun 19, 2019, 18:45 IST

How to defer student loans to pause your payments for months or years at a time

Tom Werner / Getty Images

To defer your student loans, you have to first get in touch with your lender.

When you defer student loans, you agree with your lender to put your loan payments on pause for a predetermined amount of time while remaining in good standing.
To defer, you must contact your lender directly to apply for deferral, see if you qualify, and find out the terms of the agreement. Do not stop making payments until your deferral is approved and goes into effect.
Some types of student loans accrue interest during a deferral period, while others don't. Make sure you ask your lender how interest will work in your situation.
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If you're struggling to make your monthly student loan payment, you might consider deferring your student loans.

Deferring your student loans is a way to put your payments on hold for a period of time, while remaining in good standing with your loans. Deferring can help you avoid delinquency and default. But it doesn't happen automatically and you need to talk to your loan servicer first.

How to defer your student loans

1. Contact your loan servicer or lender

The first step is to contact your loan servicer or lender. If you have federal loans, you can contact your loan servicer to see about deferment. Private loan borrowers can contact their lender directly to see what options they might offer.

Typically, federal loan borrowers have access to more perks like deferment. If you're unsure who your loan servicer or lender is you can check:

The National Student Loan Data System for federal loans
Your credit report (free once a year) from AnnualCreditReport.com for private loans

Getting in touch with your loan servicer or lender is the first step. When in contact with them, ask what deferment options are available.

2. Review deferment options

Your lender or loan servicer may offer different deferment options, based on your situation. For example, federal loans have the following deferment options:

Economic Hardship Deferment
Graduate Fellowship Deferment
In-School Deferment
Military Service and Post-Active Duty Student Deferment
Parent PLUS Borrower Deferment
Rehabilitation Training Deferment
Temporary Total Disability Deferment
Unemployment Deferment

As you can see, there are various deferment options that you may qualify for depending on your circumstances, like if you're dealing with unemployment, going back to school, or facing economic hardship.

If you have private loans, contact your lender about what deferment options may be available. For example, Sallie Mae offers some deferment options for borrowers going back to school or those in residency or in a fellowship program.

3. See if you qualify

After contacting your loan servicer or lender and reviewing your options, you want to see which deferment you qualify for. Based on the list above, you can see that there are specific types of deferment for specific situations.

If you're having trouble making payments, most likely you'll want to see if you qualify for the Economic Hardship Deferment option, which allows borrowers to defer their loans up to three years.

4. Apply for deferment

When you know what plan you qualify for, you will need to officially apply for deferment with your loan servicer or lender. Federal loan borrowers can find the deferment request forms here, which are specific to the type of deferment you're applying for. After filling out the application, submit it to your loan servicer.

Your own loan servicer or lender may request information from you or have another process for applying.

5. Remember that interest will continue to accrue during deferment, unless you have a subsidized federal loan

It's important to note that your interest may accrue during this time, adding to the total cost of the loan.

According to StudentAid.gov, if you have the following federal loans, your loans will generally continue to earn interest during deferment that you'll be responsible for paying:

Direct Unsubsidized Loans
Unsubsidized Federal Stafford Loans
Direct PLUS Loans
Federal Family Education Loan (FFEL) PLUS Loans
The unsubsidized portion of Direct Consolidation Loans
The unsubsidized portion of FFEL Consolidation Loans

If you have the following federal loans, your loans will generally not earn interest during deferment:

Direct Subsidized Loans
Subsidized Federal Stafford Loans
Federal Perkins Loans
The subsidized portion of Direct Consolidation Loans
The subsidized portion of FFEL Consolidation Loans

Note that no matter which loans you have - and especially if you have private loans - you'll want to be sure to ask your lender specifically whether your loans will accrue interest during deferment.

6. Continue making payments until you're officially approved

It's important to continue to make payments on your loans until you're officially in deferment.

Once you've submitted your application, wait for the official word from your loan servicer or lender before you stop making payments. When you get the deferment approval, then your payments will be on pause and you won't have to make a payment.

7. Know the term

When you defer your student loans, it's typically for a specific period of time. Federal loan borrowers are eligible to defer their loans up to three years for the Economic Hardship Deferment as well as the Unemployment Deferment. You may also be granted deferment one year at a time for up to three years, so may need to reapply or contact your loan servicer at the end of the first year if you wish to continue.

If you have a different type of deferment, or have private loans, your deferment term may vary. Talk to your loan servicer or lender and know the start and end date for your deferment. Put those dates in the calendar and know when your first payment is due after your deferment.

8. Get your finances in order

If you're struggling to pay back your student loans, deferment can be a great option. It helps you avoid default and delinquency. But deferment is still temporary, so during that time you want to get your finances in order.

During the months or years of your deferment, see if you can save some of the money that would have gone to your loans. If possible, see about earning more at your job or finding a job or a side hustle that will better suit your needs.

If you have federal loans and your income and expenses are still a struggle after your deferment period is over, consider going on an Income-Driven Repayment Plan, which bases your payments on your income. If your income is near the poverty level, you could have zero-dollar payments that still count toward your loans. In other words, you'll pay nothing but still remain in good standing with your student loans.

The key is to take action if you're having trouble paying your student loans, so you can avoid bigger issues like default down the line.