By Ryan Laspina
Senior Specialist, Red Flags and External Reviews
Have you accumulated student loan debt but you’re not in the financial position to start repayment? There are numerous options you can consider.
One of the most popular repayment options is called deferment. A deferment is a period of time where the repayment of your student loan debt (principal and interest) is temporarily delayed. Deferments are great if you are still in school, returning to school or temporarily unemployed.
While you won’t have to make any payments toward the principal amount during a deferment, the government may actually pay part or all of your interest payments if you have a subsidized loan. For unsubsidized loan borrowers, interest continues to accrue and you’ll be responsible for that interest after your deferment ends.
Here are some eligibility criteria you’ll need for loan deferment (note: this information only applies to direct unsubsidized and subsidized loans):
- You’re enrolled at least half-time enrollment in college.
- You’re studying in an approved graduate fellowship program.
- You’re unemployed or are unable to work full-time (maximum of three year period).
- You’re going through a period of economic hardship (for example, service in the Peace Corps).
- You’re on active-duty military service during a war or national emergency.
The easiest way to receive a deferment is to be enrolled half-time in college. However, be financially responsible — don’t take on more loan debt to postpone paying your current loan debt.
If you’re able to attend classes without taking out student loans, then using a loan deferment while you advance through your education is a great idea. Also, be sure to discuss your financial situation with financial aid advisors at your school, as well as with your loan servicer.
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