Federal Student Loan Deferment and Forbearance

Federal student loan deferment or forbearance grants you permission to take a break from making your student loan payments or to reduce the amount that is due each month.

There are different eligibility requirements for federal loan deferment and forbearance. To learn more about deferment vs forbearance student loan solutions and decide which one is right for you, read the sections below.

What is student loan deferment?

“What is student loan deferment?” That is usually the first question asked when students learn that deferment is an option for loan repayment plans. As stated above, federal loan deferment allows you to take a break from making monthly payments on your student loans. The main advantage to federal student loan deferment is that you may not be required to pay the interest that accrues on certain loan types while you are in the deferment period. However, if you seek federal loan deferment on an unsubsidized Direct PLUS Loan or a Federal Stafford Loan, you will still be responsible for paying interest.

What is student loan forbearance?

Federal student loan forbearance grants you permission to stop making payments for a certain period of time or you may be able to temporarily reduce the amount you pay each month. The main difference from loan deferment is that interest will continue to accrue during your forbearance period. You may also be able to obtain a federal student loan forbearance even if your loan is in default—something that is generally not allowed for deferments. It is usually easier to obtain a forbearance than a deferment.

Student Loan Deferment or Forbearance Eligibility

Eligibility requirements for federal loan deferment and forbearance share certain similarities and differences. In addition, there are two types of federal student loan forbearances: general and mandatory. You may qualify for a federal student loan deferment if any of the following apply:

  • You are enrolled at an eligible college or career school at least half-time.
  • You have a Direct PLUS Loan or a FFEL PLUS Loan with a student enrolled at least half-time.
  • You are enrolled in an approved graduate fellowship program.
  • You are enrolled in an approved rehabilitation training program for disabled individuals.
  • You are unemployed but seeking employment, for up to 3 years.
  • You are suffering from economic hardship.
  • You are serving on active duty in the military or are serving in the Peace Corps.

Related Article: Grad PLUS Loans

As stated previously, there are two types of federal student loan forbearance. The decision to issue a general forbearance, or discretionary forbearance, is up to the loan servicer. General forbearances are available for Direct Loans, Stafford Loans and FFEL Program Loans and are generally granted for the following reasons:

  • A change in employment.
  • Unexpected financial difficulties.
  • Medical expenses.
  • Other reasons acceptable to your loan provider.

Loan servicers are required to grant federal student loan forbearances in certain circumstances. Mandatory forbearance eligibility applies if:

  • You are serving in a medical or dental internship and you meet specific requirements.
  • The total amount you owe per month for all your student loans is 20 percent or more of your total monthly gross income, for up to 3 years.
  • You are serving in an AmeriCorps position for which you received a national service award.
  • You are teaching in a service position that makes you eligible for the teacher loan forgiveness program.
  • You meet requirements for partial repayment of your loans under the U.S. Department of Defense Student Loan Repayment Program.
  • You are in the National Guard and have been activated by a governor, but you are not eligible to receive a military deferment. HERE

How long can you defer student loans?

Most federal student loan deferment plans last between 6 months and 1 year, and are determined by the loan servicer. The loan servicer also sets a forbearance time limit on Direct Loans or Federal Family Education Loans (FFEL). Your forbearance will usually end on the earlier date you requested on the student loan forbearance form or 12 months from the date the forbearance begins.

If you need forbearance on a Perkins Loan, there is a cumulative limit on general forbearances of 3 years. With all types of federal student loan forbearance, you can request another forbearance if your financial hardship extends beyond the end of the initial forbearance request. Note that interest never capitalizes on Perkins Loans, even during forbearance.

How to Request a Deferment or Forbearance

Most federal loan deferment or forbearance plans are not automatic, and usually require submitting a form to request the temporary break from payments. To obtain federal loan deferment, you must provide your loan servicer with documentation of your current financial state and prove that you meet their requirements for receiving a deferment. Your loan servicer will explain their terms for deferment and let you know which forms they require to initiate the process. If you are enrolled in college at least half-time, your loan will be placed into deferment automatically. If this does not happen, contact your school and request a deferment.

If you need to apply for loan forbearance, the student loan forbearance form is available online from the U.S. Department of Education. Simply search for the general forbearance request form and provide all the information requested.

While waiting to hear if your request for deferment or forbearance has been granted, you must continue making payments. If you stop making payments during this waiting period and your request for federal loan deferment or forbearance is denied, your loan may become delinquent and go into default.

Related Article: Income-Driven Student Loan Repayment

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