Understand How Student Loan Deferment Works

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Flickr user Steve Johnson

If you are struggling to make your monthly student loan payments due to financial hardship, a medical emergency, or some other life circumstances, you may be qualify to apply for a student loan deferment.

Student loan deferment allows you to suspend all loan payments temporarily for a period of time, so you can use your available funds to pay for your everyday necessities such as your rent, groceries, utilities, and gas. The length of time that you are allowed to defer your loan for may vary from one program to another.

Eligible Criteria for Deferment

Not all borrowers are eligible for student loan deferment. You may be eligible if you meet any of the following requirements:

  • You must be enrolled in college and attending at least part time
  • You are serving in the military or just completed a period of military service
  • You are enrolled in a graduated fellowship program
  • You are unemployed and/or looking for a job – you will need to provide proof that you have been actively seeking employment
  • You can provide proof of financial hardship due to circumstances beyond your control
  • You are serving in the Peace Corps
  • You are called to service while still enrolled in college
  • You are participating in a rehabilitation training program for disabled individuals

In addition to the above, you must also be up to date with your student loan payments. If your payments are delayed or you are in default, you may lose your eligibility.

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Basic But Important Facts About Student Loan Deferment

Student loan deferment is only a temporary suspension of your loan payments. It only grants you reprieve from making your payments for the period of time specified in the agreement. When that time is up, you must start making the payments.

Loan deferments are not automatic. If you are struggling financially and miss making one or more payments, you cannot assume that the lender will automatically grant you deferment. If you miss one payment, it is considered a delayed or missed payment. If you do not make any payments for 270 days, you are in loan default, which has serious consequences. If you think you may not be able to pay off your loan, you must speak to your lender and explore available solution before your loan due date.

Do not stop payments immediately after applying for deferment. The process may take time. The deferment is only valid after your application has been approved. If you stop making payment before you’ve received notice of approval, your application may be rejected and you may instead be penalized with late fees and maybe even loan default if the period of non-payment crossed 270 days.

If you think there may be the faintest possibility that you may need to defer your student loan payment, it is a good idea to speak to your lender in advance and find out about the eligibility requirements. Some lenders will only grant deferment to borrowers who have at least twelve months of employment. Others require borrowers to be in good standing with their loan. Still others may have other requirements. You must find out details from individual lenders so you know what your option are.

Drawbacks Of Student Loan Deferment

Being able to suspend your student loan may seem like a lifeline when you are struggling financially. And it is. However there are a few drawbacks that you must know about. Deferring a loan may be the ideal solution for some borrowers but not for all. Understanding the pros and cons will help you make a more informed decision

While deferment may suspend your loan payments for a period of time, they do not suspend the interest accrual. During the period of deferment, the interest on your loan goes on accruing and gets added on to your total loan amount, increasing your total debt substantially.

You are only eligible to apply for one deferment during the term of your loan. Very few lenders if any will approve of a second deferment term. Even if you have more severe financial problems at a later date, you will not be able to avail of deferment benefits again.

What Are The Alternatives To Deferment?

If you think you are headed towards delayed or missed payments or default, the first place to start looking for solutions is your budget. Take a good, hard look at your earnings and expenditure and cut luxuries from your list. Only budget for absolute essentials—rent, utilities, groceries, and medical expenses if any. If you have any money left over, use that towards making your loan payments. Making your loan payments on time should always be your first solution.

If there is no way you can make the loan payments with your earnings, even after cutting off all luxury items from your list, you must speak to your lender to explore the options available to you.

Some alternatives that you may be able to opt for may include:

Graduated payment plan

This plan allows you to start off making smaller payments. The payments gradually increase over a period of time.

Income-based payment plan

With this plan, you pay a percentage of your income as your monthly loan payment. If you earn more, you pay back more every month. If your income is low, your monthly loan payment is lower too. This is one of the more commonly-used alternatives because it ensures that you only pay part of your income as your payment while still having enough to pay for your monthly essential.


If you have been making your payments regularly so far, some lenders may allow you to refinance your loan at a lower rate of interest. This could mean significant savings. You must ask your lender about refinancing if you have been regular with making your loan payments.

Finding the best solution when you are struggling to make your loan payments starts with talking to your lender and the best time to do this is before your record is blemished with late or missed payments.

Use College Raptor’s Student Loan Finder to discover personalized loan options. Compare lenders and interest rates to find the ideal student loan—for FREE!


Lender Rates (APR) Eligibility
Earnest company logo.
Variable APR: 1.74% - 5.64%*
Fixed APR: 2.44% - 5.79%*
Undergraduate and Graduate
Lendkey company logo.
Variable APR: 1.90% - 5.25%*
Fixed APR: 2.49% - 7.75%*
Undergraduate, Graduate, Parent PLUS
Credible company logo.
Variable APR: 1.80% - 9.99%*
Fixed APR: 2.15% - 9.99%*
Undergraduate and Graduate
Laurel road company logo.
Variable APR: 1.89% - 5.90%*
Fixed APR: 2.50% - 6.00%*
Undergraduate and Graduate
Commonbond company logo.
Variable APR: 1.98% - 7.04%*
Fixed APR: 2.59% - 6.94%*
Undergraduate, Graduate, Parent PLUS
Fixed APR: 2.44% - 6.22%*
Undergraduate, Graduate, Parent PLUS
VISIT ISL Education Lending
Variable APR: 1.87% – 6.52%**
Fixed APR: 2.30% – 5.96%**
Undergraduate, Graduate, Parent PLUS
VISIT Nelnet
Variable APR: 2.94% - 4.79%*
Fixed APR: 2.99% - 4.89%*
Undergraduate and Graduate
VISIT College Ave
Variable APR: 1.86% - 6.01%*
Fixed APR: 2.47% - 5.99%*
Undergraduate and Graduate, Parent PLUS

*APR includes a 0.25% interest rate reduction for enrollment in automatic payments.

**Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.

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