Student loans must be repaid. However, the federal government understands that you may not have the money to repay your loans when they are due. That’s why you have two options to suspend student loan payments: deferment or forbearance. A deferment is specific to the time which the interest and principal you pay on your loan are temporarily delayed. During this time, you do not need to make payments. In addition, the government will pay your interest on your subsidized Federal Stafford loan, Direct Subsidized loan, and Federal Perkins loan. However, if you have a PLUS loan, you are responsible for paying the interest during the deferment period.
Are You Eligible for a Deferment?
There are situations where you automatically qualify for a deferment. For example, if you are enrolled in college at least half-time, in a fellowship or rehabilitation program, you don’t have to complete any forms for a deferment. You are also eligible if you are in:
- Active duty. You are serving in the military during a war, national emergency or military operation.
- End of active duty. For 13 months after your duty ends or you return to college if you are in the National Guard or reserve.
- Unemployed. You are either unable to find full-time work or you’re without a job. This eligibility is only for three years.
- Economic hardship (including Peace Corps Service). This means that you are employed, but do not have enough money to pay your bills and your student loans.
Obtaining a deferment
The majority of the deferments such as an economic hardship deferment aren’t automatic. Thus, you want to contact your loan servicer. Your loan servicer is the company that collects your payments. You can contact it via its website or by phone. Request the deferment application. You may be able to complete it online and send it back to the servicer. Once processed, the servicer will send you a letter indicating that you have been approved or denied a deferment. If you are approved, the letter will provide the date of your approval and length of deferment.
Forbearance
A forbearance may be an option if a deferment isn’t an option for you. For up to a year, you can reduce your monthly payments or stop making them altogether if you are granted a forbearance. The interest continues on both your unsubsidized and subsidized loans. This includes your PLUS. There only two types of forbearance: mandatory and discretionary.
A mandatory forbearance eligibility requirements:
- Serving in a dental or medical internship or residency program.
- Serving in a national service position.
- Your loan payment amount is over 20 percent more than your monthly gross income.
- Qualify for a teacher loan forgiveness.
- Qualify for a partial repayment of your loan.
- Military member not eligible for a deferment.
- A discretionary forbearance eligibility requirements:
- Illness
- Financial hardship
To apply for a forbearance, you must follow the same steps as requesting a deferment. The difference is that you may have to provide supporting documents to prove you need the forbearance.
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