What Is Economic Hardship Deferment?

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Economic Hardship Deferment is a student loan borrower protection. It allows borrowers to temporarily defer payments toward their loans. If the borrower has a subsidized loan, it will not accrue interest throughout the deferment period. Deferment periods are taken in one-year increments, up to three years total. This deferment plan is only eligible to people who have taken out federal loans, and only certain loans at that.

Qualifying Loans Include:

  • National Direct Loans
  • Family Education Loans
  • Stafford Loans
  • Perkins Loans
  • Supplemental Loans
  • PLUS Loans
  • Consolidation Loans
  • and National Defense Loans.

Eligibility Requirements

In order to be eligible, borrowers must be employed full-time. From there, borrowers must fall into one of four categories: been granted economic hardship deferment on another federal student loan plan for the same period of time; having received payments from federal or state public assistance programs; are serving in the Peace Corps; are making less than 150% of the poverty guideline in income for your family size (specific to state of residence).

Economic hardship deferment is a way for borrowers to get their feet back under them. Borrowers who are still having difficulty after the first one-year increment may reapply for deferment, bearing in mind that they will be subject to the same rules as for the first application.  

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