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Deferring Student Loans

If you’re having trouble paying your student loan bill, requesting a deferment might keep you from defaulting on your loan without hurting your credit. Deferring your loan is like asking for an extension or postponing payment for a defined period of time. After the agreed-upon time is up, you resume paying your loan as usual, and the missed payments are added at the end of the loan. Most lenders have a set policy about deferments that allows a certain number of deferred payments within a specific time period.

When to Consider Student Loan Payment Deferment

We all have times in life when personal finances fluctuate, money gets tight, and meeting our financial obligations becomes difficult. The time to look for solutions, like deferment, is when you first realize you’re not going to be able to make a payment. With so many people defaulting on student loans, lenders want to know that you are sincere and willing to pay the bill, just temporarily unable.

Deferment is the answer to a temporary money issue, but not a good long-term solution. In most cases, if you’re not making the payments, interest continues to accrue. Which means you could wind up paying far more by the end of the loan. One way to combat this would be to pay extra when you are back on your feet and can afford to catch up. Even a little extra every month can have a big impact in terms of interest amortized over many years, and most student loans can be paid off early without penalty.

There are many types of student loan deferments available. The rules for each are governed by the year your loan originated, by economic factors (your ability to pay) and by your circumstances.

How to Qualify for an Economic Hardship Deferment on a Student Loan

Qualifying for an Economic Hardship Deferment
Economic hardship deferments are for people who cannot make their payments because their income is low enough to meet the criteria. Here are the criteria for approval:
1. You have already qualified for an economic hardship deferment for another federal student loan.
2. You receive federal or state assistance, including welfare, food stamps, disability, or other types of assistance.
3. You are a volunteer for the Peace Corps.
4. You meet the minimum low income. You can find out if your income qualifies using the Economic Hardship Deferment Calculator.
5. You are unemployed and either receiving unemployment benefits or are actively seeking employment. If you are a recent graduate seeking a job or your unemployment has run out, you can document job seeking activities by being registered with an employment agency.

Most student loans can be deferred indefinitely as long as you remain in school at least half-time, but you must be careful of accruing interest. Understand the terms of your loan before making any kind of deferment arrangement.

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