Credible takeaways
- You must be unemployed, receiving unemployment benefits, and actively seeking work to qualify for unemployment deferment for federal student loans.
- The unemployment deferment option for federal loans is being phased out for new borrowers starting in July 2027.
- Applying for unemployment deferment is straightforward with a basic form and supporting documentation.
- A drawback of deferring payments on certain types of federal student loans is that interest may accrue during the pause.
Losing a steady income can seriously disrupt your budget, especially with student loan payments due. A deferment on federal student loan payments when you become unemployed may be available if you qualify. However, private lenders don’t always offer student loan unemployment deferment.
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What is student loan unemployment deferment?
Student loan unemployment deferment offers the option to temporarily pause or significantly reduce federal student loan payments in the event you lose your job and are receiving unemployment benefits.
While deferment can allow you to press pause on making payments, or at least lower them, interest may continue to accrue during that period of non-payment, depending on the type of loans you have. Additionally, during deferment, borrowers will stop making progress toward paying down their loans or, if they are eligible, securing loan forgiveness.
Who qualifies for unemployment deferment?
As part of President Trump's signature tax and spending legislation, the One Big Beautiful Bill Act, federal student loan deferment will only be available to borrowers with loans made on or before July 1, 2027. Borrowers who take out loans after that date will no longer have access to loan deferment, including unemployment deferment.
Borrowers who still have the option will need to meet other requirements to get unemployment deferment. To be eligible, you must be receiving unemployment benefits and be actively seeking but unable to find employment. It’s necessary to have made at least six attempts within the last six months to secure full-time employment. Borrowers will not be eligible if they have rejected an employment offer, even if it was because they were overqualified.
How to apply for deferment while unemployed
You must fill out a specific form and submit it to your student loan servicer to apply for unemployment deferment, which you can find on StudentAid.gov.
The application form requests personal information, such as your contact details and Social Security number, and guides you through a series of questions to help determine your eligibility.
You must confirm that you’ve made the requisite effort to seek full-time employment, and that you are receiving unemployment benefits, assuming you live within 50 miles of a public or private employment agency. You may also need to provide documentation proving your eligibility, such as a copy of your unemployment benefits statement. It's necessary to certify and sign the application.
You’ll then need to send the form, along with any required documents, to your student loan servicer for review.
Does interest accrue on student loans during unemployment deferment?
Interest may or may not accrue during unemployment deferment, depending on what type of loans you have.
Interest does not accrue in deferment on the following types of federal student loans:
- Direct Subsidized Loans
- Subsidized Federal Stafford Loans
- Federal Perkins Loans
- Subsidized portions of Direct Consolidation Loans and FFEL Consolidation Loans
Interest does accrue on these types of federal loans:
- Direct Unsubsidized Loans
- Unsubsidized Federal Stafford Loans
- Direct PLUS Loans
- FFEL PLUS Loans
- Unsubsidized portion of Direct Consolidation Loans and FFEL Consolidation Loans
If your loan has continued to accrue interest during deferment, that interest will be added to your balance at the end of deferment. You can avoid interest capitalization by paying interest while you’re in deferment, “but realistically, if you’re unemployed, that’s not always possible,” says Stanley Tate, an attorney specializing in student loans.
What to do when your deferment ends
When the deferment period ends, it’s a good time to evaluate your student loan repayment plan options, including income-driven repayment, advises Adam S. Minsky, an attorney focused on helping student loan borrowers and their families.
If your income still isn’t enough to afford your monthly student loan payments, an income-driven repayment plan, which adjusts the amount you have to pay based on your earnings, may help make them more manageable.
Editor insight: “I recommend setting a reminder about two months before your deferment period expires. That’s enough time to review your budget, update your income information, and apply for an income-driven repayment plan if needed.”
— Richard Richtmyer, Student Loans Managing Editor, Credible
On the other hand, if you start earning income again, you may be ready to resume payments, a reality you still want to ensure your budget is prepared to handle.
Whatever the case, what's essential is proactively evaluating what will be feasible after the unemployment deferment, and then formulating a plan.
“If you’re not ready to resume payments, move into an income-driven plan before the deferment ends,” advises Tate. “Waiting until the first bill shows up just puts you back in crisis mode.”
FAQ
How long can I defer student loan payments if I'm unemployed?
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Will I owe interest during student loan deferment?
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Does student loan deferment hurt my credit?
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Can private student loans be deferred?
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What if I don’t qualify for student loan deferment?
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