Student Loan Deferment

This article will discuss student loan deferment in general and the major types of deferment available for federally backed student loans. You might be able to obtain a deferment on a private student loan, but that is strictly up to the lender. The borrower has no right to a deferment as they do with a federal loan, and that is another reason to avoid private student loans if at all possible.

For federal loans the lender cannot deny you a deferment if you meet

the qualifications. You must complete all the necessary paperwork. If you have a subsidized loan the government will make the loan interest payments during deferment, but if your loan is not subsidized the interest will be added to the loan balance, or capitalized in student loan speak. You can make payments on a loan that is in deferment and not lose deferment status. If at all possible it is a good idea to make at least interest payments on non-subsidized federal loans during deferment in order to at least keep the loan balance at the level it was. If borrowers let their loan balance balloon they may find it difficult to ever get out from under their student loans.

In School Deferments

If you are enrolled at least half-time in an accredited institution of higher learning you are eligible for an in school deferment. Of course you must fill out all the necessary paperwork and inform your lender. There is no time limit for an in school deferment as long as you remain in school. If you take a semester off or transfer schools you need to notify your lender.

Unemployment Deferment

If you working less than 30 hours a week you are considered to be substantially unemployed, and you can qualify for an unemployment deferment. You can obtain this type of deferment by qualifying for state unemployment benefits or registering with an employment agency and actively seeking full time employment. For the first six months there is no requirement to document what you have done in a job search, but to obtain an extension beyond that you need to prove you applied to at least six firms in six months. Unemployment deferments can be extended up to 3 years for federal student loans issued from 1993 and later. They can only be extended for 24 months for federal student loans issued before 1993. These deferments are available for people with Perkins loans, Stafford loans, and Direct Loans, and for parent borrows of PLUS loans if the parent is unemployed.

Economic Hardship Deferment

This deferment is for people who cannot qualify for the unemployment deferment. You are eligible if your full-time employment monthly income does not exceed the larger of the federal minimum wage or 150% of the poverty level for your size of family in the state you reside. You also qualify if you have already received an economic hardship deferment from another federal program such as a Perkins loan, or if you are receiving state or federal assistance, such as food stamps, or if you are in the Peace Corps. You’ll need to keep pay stubs, tax records and any financial records relating to money you have received, as you will be required to substantiate all income and aid received to qualify for this deferment.

Military Deferment

A person with a federal student loan who is called to active duty can qualify for this deferment. This deferment is also available for students who enter the military on active duty and who wish to return to school after finishing military service. The deferment ends 13 months after the active duty service is completed or when the student re-enters school, whichever comes first. Be sure to speak with your loan representative to complete the necessary paperwork for this type of deferment.

Graduate Fellowship Deferments

This type of deferment is for people doing graduate studies that are outside the classroom, for example doing research, independent study or teaching. You need to have a bachelor’s degree and be certified by a member of the program. These deferments are available for people with Perkins loans, Stafford loans, and Direct Loans, and for parent borrows of PLUS loans taken out before 1993.

Perkins Loan Deferments

Perkins loans, which are awarded to students with exceptional financial need, have their own deferments. Many of these loans can qualify for forgiveness if the borrower takes part in a public service type of career. If you have obtained a Perkins loan be sure to meet with your loan advisor at your school and understand what these public service professions are and if you might qualify for a student loan deferment or loan forgiveness.