Can't pay?/Postponing Repayment

You have the right to postpone payment of a loan for a period of time after leaving or graduating from an educational program or due to special circumstances. There are two types of postponements : deferment and forbearance. Deferment is the better of the two, so pick that if you qualify. This table references only Federal loans. If you need to postpone private loan payments, you must contact your lender or servicer for each loan.

If you are concerned that you will not be able to repay your loan, make certain to contact the original lender or current servicer of your loan if you miss payments. In most cases, if you default on your loan, you are no longer eligible for a deferment or forbearance.

Deferment

Lenders frequently allow student borrowers to postpone making payments on their loans while enrolled in school at least half time and extending a number of months after students leave their program or graduate. This latter period is called a grace period, and typically lasts six to twelve months, though details vary by loan type and lender. During these times, interest may accrue. Some lenders allow you to pay the accruing interest during this time. These are called interest-only payments.

If you are concerned that you will not be able to repay your loan, you should contact your lender to inquire about the possibility of deferment or forbearance. Make this inquiry before you miss payments. In most cases, if you default on your loan, you are no longer eligible for a deferment or forbearance.

Chart on Federal Loan Deferment Options
Deferment Federal Stafford, Grad PLUS, or Perkins Parent PLUS
College Enrollment: Enrolled at least half-time at an accredited postsecondary school Yes No
Graduate Fellowship Contracted for a full-time course of study in a graduate fellowship program for a period of at least six months. Yes No
Unemployment: Diligently attempting but unable to find full-time employment or working less than 30 hours a week, or working a temporary full-time job that will last less than 90 consecutive days. Up to 3 years Up to 3 years
Rehabilitation training: Enrolled in an approved rehabilitation training for disabled individuals by a state agency or the US Department of Veterans Affairs that is responsible for vocational rehabilitation, alcohol abuse treatment programs, drug abuse treatment, or mental health services. Yes Yes
Economic hardship: Documented receipt of federal or state public assistance programs such as Temporary Assistance to Needy Families (TANF), Supplemental Security Income (SSI), or food stamps; serving as a Peace Corps volunteer, or working full time but either 1) are earning the federal minimum wage rate or B) are earning below 150% of the poverty line income for your family size based on your state of residence. Up to 3 years Up to 3 years
Military Service Deferment: Serving active duty military service or National Guard duty, during a war, other military operation, or a national emergency. Status continues during active duty designation and continues for an additional 180 days upon completion of service. Yes Yes
Active Duty Student Deferment: Created for members of the US Armed Forces or National Guard who are ordered to active duty while enrolled at least half-time at an accredited postsecondary school or within 6 months after ceasing to be enrolled at least half-time. Qualification for this deferment lasts 13 months following the conclusion of the active duty service, or until the borrower re-enrolls at least half-time at an accredited postsecondary school. Yes Yes
PLUS Borrower with Enrolled Dependent Student Deferment: Created for parents with Direct PLUS loans and a dependent student on whose behalf the loan was obtained. Their student must be enrolled at least half-time at an accredited postsecondary school or in the 6-month period after that student ceases to be enrolled at least half-time. No Yes

For more information on federal loan deferments, click here.

Pro's

  • Government pays interest for subsidized loan payments
  • Preserves credit rating

Con's

  • Requires documentation of qualifying status
  • Unsubsidized loan interest will be capitalized (added to principal balance) upon status change
  • Stops repayment clock

Forbearance

This is a debt management provision offered by many lenders whereby payments on the loan in question are temporarily suspended. If you ask for forbearance, you may be able to make no payment or at least a lower amount. However, it's different from deferment in that interest will still accrue on your loans. That interest will also be capitalized, meaning you will pay interest on that interest. Forbearance is not automatically granted and requires documented proof of extreme financial hardship or other unusual circumstances. Even if forbearance is granted, the suspended payments will still be due eventually -- plus any interest that might have accrued on the suspended payments. For more information, contact the original lender or current servicer of your loan.

For more information on federal loan forbearance, click here.

Pro's

  • Preserves credit rating
  • Easy to request plan via phone, email or online account access

Con's

  • May still require a small payment
  • Unpaid interest may be capitalized (add to principal balance) monthly
  • Stops repayment clock