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What is Student Loan Deferment?

If you’re facing a financial hardship that prevents you from making payments on your student loan, you may qualify for a deferment program.

Eric Rosenberg Eric Rosenberg Edited by Jared Hughes Updated November 21, 2022

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

Editor’s note: In response to the coronavirus national emergency, interest, payments, and collections of federally-held student loans have been suspended through at least June 30, 2023.

Student loan deferment can help you catch a break on student loan payments during a period of financial hardship or other circumstance. Hitting the pause button on payments will pause interest in some cases, but not all.

Here are examples of when deferment makes the most sense:

  • You’re temporarily struggling with student loan payments, but expect the situation to resolve in three years or less.
  • You’re back in school at least half-time, are actively serving in the US military, Peace Corps, or AmeriCorps, or in a graduate fellowship program.
  • You have Direct Subsidized Loans, Subsidized Federal Stafford Loans, or Federal Perkins Loans (other loans are eligible, but might still accrue interest during deferment).

Here’s everything you should know about student loan deferment and whether it’s right for you:

  • How student loan deferment works
  • When student loan deferment might make sense for you
  • Pros and cons of student loan deferment
  • How to defer student loans
  • Alternatives to student loan deferment
  • How student loan deferment compares to other repayment plans

How student loan deferment works

The first step in both private and federal student loan deferment is making sure you’re eligible. You’ll apply for deferment through your loan servicer and will use their form to apply. Here are the requirements for common student loan deferments due to financial reasons:

  • Economic hardship: You may qualify if you’re receiving government assistance or earn less than 150% of your state’s poverty line. You can get benefits for up to 36 months.
  • Unemployment: Those receiving unemployment benefits or are seeking full-time work may qualify for up to 36 months.

There are other deferments available too if you meet certain criteria. Students, military members, and others may be able to defer under one of these circumstances:

  • In-school: If you’re back in school at least half-time, you should automatically get a deferral for the duration of your education. If that doesn’t happen, contact your school’s financial aid office. Approved graduate fellowship programs also qualify.
  • Military: Active duty military in connection with a war, military operation, or national emergency may qualify for a deferment. This lasts up to 13 months after the conclusion of active duty service.
  • Volunteer programs: Joining the Peace Corps technically counts as an economic hardship deferment for up to 36 months.
  • Rehabilitation training: If you’re in an approved rehabilitation training program for the disabled, you can defer payments.
  • Cancer treatment: You can get deferment during treatment for cancer and up to six months after treatment ends.

Parents may be able to defer payments for Direct PLUS Loans or FFEL PLUS Loans if the student goes back to school at least half-time.

When student loan deferment might make sense for you

Sometimes it’s easier to understand how deferment works by seeing it in action. Here are some examples of when student loan deferment could make sense:

  • Unemployed: You were laid off from a job and collect unemployment. While on the hunt for a job, you can defer student loan payments. Once you find a job, you’ll go back to your regular payment schedule.
  • Peace Corps: After graduation, you decide to join the Peace Corps to make the world a better place. While on a 24-month assignment across the world, you put payments on hold with an economic hardship deferment.
  • Military: A major disaster meant your National Guard unit was called up. While serving for a few months, your regular paychecks stop coming in. You don’t have to make student loan payments while deployed, however, thanks to the active military deferment.
  • In-school: After a few years in the workforce, you decide to go back to school for a graduate degree. Your student loan payments pause when you start your first semester.
  • Perkins Loan Cancellation and Discharge: If you’re working toward forgiveness on a Federal Perkins Loan, you may be able to defer payments.

Learn More: Student Loan Deferment vs. Forbearance: How to Choose

Pros and cons of student loan deferment

Pros

  • Temporarily pauses student loan payments
  • Qualifying loans don’t accrue interest during deferment
  • Gives you breathing space while you get back on your feet

Cons

  • Some federal student loans still accrue interest
  • Not a long-term solution for people struggling to make payments
  • Must reapply to keep deferment in some situations

How to defer student loans

Student loan deferment is a relatively straightforward process if you qualify. In most cases, you’ll work with your loan servicer to start a student loan deferment. Here’s how to get started:

  1. Go to StudentAid.gov and download the appropriate application.
  2. Fill out the application and gather any additional required documentation.
  3. Send the completed application to your loan servicer for approval.
  4. While waiting to hear back, continue your regular student loan payments as scheduled.
  5. Reapply or recertify your deferment as required. Don’t miss a deadline or your deferment could end.
  6. When your deferment period ends, resume payments as scheduled.

Alternatives to student loan deferment

Managing your outstanding student loan debt is difficult, especially when you’re undergoing significant financial or medical hardship. Deferment may be the right option, however, some circumstances (such as rejection of deferment) may warrant an alternate strategy.

Forbearance

Both deferment and forbearance allow you to pause or reduce your federal student loan payments temporarily. Depending on your loan, you may or may not accrue interest during deferment, but you do accrue interest while in forbearance. Forbearance is an option for those who cannot qualify for deferment and are facing a temporary financial hardship that prevents them from making their student loan payments.

Income-driven repayment

An income-driven repayment (IDR) plan is based on a percentage of your discretionary income and your family size. It’s generally 10 percent of your income. Because you can qualify for a plan for as long as 20 to 25 years, it’s an option for those who believe they’ll be facing long-term financial hardship. Most federal student loans are eligible and your payment could be as low as $0 per month.

Work out a repayment plan with a lender

Anytime you’re experiencing financial hardship that impacts your ability to pay your student loans, you should immediately contact your lender. Try to work out a repayment plan with them before applying for deferment, forbearance, an income-driven repayment plan, or a refinanced loan.

Refinancing

Refinancing your student loans could allow you to hold a new loan with a lower interest rate, a shorter loan term, or both. This may be a good option for private loan holders. Federal loan holders may not want to refinance, however, because they’ll likely lose all current and future federal benefits like student loan forgiveness, deferment, or forbearance.

How student loan deferment compares to other repayment plans

If you’re having trouble with your student loan payments, deferment isn’t your only option. Here’s a comparison of your other options if you don’t qualify or want something long-term.

Term duration Interest Who qualifiesAffects credit score
DefermentUp to 36 monthsMay or may not accrue
(depends on the type of loan)
Some borrowers
(limited circumstances)
No
ForbearanceUp to 12 months at a timeAccrues during forbearanceSome borrowers
(limited circumstances)
No
Income-driven repayment (IDR)Life of loan as long as you qualifyPossible interest savingsMost borrowersNo

Check Out: Student Loan Refinance Calculator: Should I Refinance?

Nick Dauk has contributed to the reporting for this article.

About the author
Eric Rosenberg
Eric Rosenberg

Eric Rosenberg is an expert on personal finance. His work has been featured at Business Insider, Investopedia, The Balance, The Huffington Post, MSN Money, Yahoo Finance, Mint.com and more.

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