What is a Student Loan Deferment, and Do You Qualify?
Graduation day is usually one filled with pride and excitement, as you've finally reached the day that marks the culmination of years of hard work, effort and sacrifice. Every ounce of blood, sweat and tears you've put into your studies has finally paid off, and now you get to sit back and bask in the glow of joining the world's elite club of having achieved higher education. But with this accomplishment comes the realization that you now have student loans to repay, some of which can number in the tens of thousands. However, there is something called "loan deferment" that can take a bit of the burden off your shoulders, so read on to find out more about it.
Student Loan Deferment: How it Works
The U.S. Department of Education outlines loan deferments very simply as "a period during which repayment of the principal and interest of your loan is temporarily delayed." Students who go down this route choose this option because of financial hardships that prevent them from making their monthly payments, such as not being able to find a job in their field after graduation.
During this temporary period, you're not responsible for making any payments on your student loan, and can even possibly have the government pay the interest on your loan. The three types of loans that may qualify are the Federal Perkins Loan, Direct Subsidized Loan, and/or the Subsidized Federal Stafford Loan. One really important thing to keep in mind is if you've gotten unsubsidized loans, the government will not pay the interest on them (this includes PLUS loans). You'll still have to pay the interest on these unsubsidized loans, but your payment isn't due during the deferment period.
Checking for Eligibility for Student Loan Deferment
The Student Aid site on the U.S. Department of Education lists the full criteria for each type of federal loan that can qualify you for deferment, but here are a few things to keep in mind.
1. All loans (Direct Loans, FFEL Loans, Perkins Loans) can be deferred during a period of at least half-time enrollment in college or career school, as well as if you're in an approved graduate fellowship program or approved rehab training program for the disabled.
2. Only the Perkins Loan can be deferred during a period of service qualifying for a Perkins Loan discharge or cancellation.
3. Active military service during either a war, military operation or national emergency will qualify you for loan deferment from all loans (Direct Loans, FFEL Loans, Perkins Loans).
4. Additional deferments can be applied for if you've borrowed from either the Direct Loan or FFEL Program before July 1, 1993, and have spent your time doing things like teaching in a teacher shortage area, been engaged in public service, become a mother or have gone on parental leave, or suffered a temporary disability.
Lengths of Deferments
As we wrote in the beginning, a deferment is intended to be a temporary measure where you get some relief from having to pay back your student loans. As such, there are very specific periods of time during which you don't have to make payments on your loans, and they range from one to three years. Once you get past that, you start getting into cancellation territory.
For example, if you're granted a deferment on your Stafford Loan because of economic hardship, deferment will be granted only for up to a year, and it can't total more than three cumulative years. To use another example, if you're unemployed following graduation, then you can apply for loan deferment for up to three years if it's a Perkins Loan, with your school determining which documents you need to qualify for this type of deferment (each school is different).