Postponing Your Student Loans (Deferment & Forbearance)

Aug 12 · 2 min read

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Postponing Your Student Loans (Deferment & Forbearance)

Life happens. And when it does, your finances can be thrown out of whack. If you run into a financial situation where you’re having trouble making your monthly student loan payments, you may want to consider deferment or forbearance .

Entering a period of deferment or forbearance will allow you to temporarily postpone your federal student loan payments and avoid defaulting on your loans . While deferment and forbearance both give you the time needed to get back on your feet, you’ll want to get whyze and learn about their key details.

Deferment

A deferment allows you to temporarily postpone your student loan payments for numerous reasons.

  • Being A Half-Time
  • During A Grace Period
  • While Enrolled In An Approved Graduate Fellowship Program
  • While Enrolled In An Approved Rehabilitation Training Program
  • During Unemployment
  • During Economic Hardship
  • While Serving In The Peace Corps
  • While Active Duty Military

If any of these reasons apply to you, you may be eligible to defer your federal student loan payments. Although deferment will be applied automatically in some cases, you will want to make sure you don’t need to submit a deferment request to your student loan provider. If you’re currently enrolled, you may also want to contact your school’s financial aid office.

During deferment, you are not responsible for paying the interest that accrues on Subsidized Loans and Perkins Loans. On the other hand, you will be responsible for repaying the interest that accrues on any other loan type.

If you have more than just Subsidized and Perkins loans, you’ll have to decide whether you want to pay the interest on your loans as it accrues or allow it to accrue and be added to the principal of your student loans at the end of deferment.

If you decide to not pay the interest while in deferment, it may cost you more money in the long run. This is due to compound interest . Since your accrued interest is now added to your loan principal and your loan principle accrues interest, you’ll be paying interest on interest.

This is the type of compounding you don’t want with student loans, so keep this in mind.

Forbearance

If you’re not eligible for deferment, forbearance may be a good alternative. Forbearance is generally similar to deferment. One of the big differences involves which loans will accrue interest during your postponed payments. Unfortunately, if you’re approved for forbearance, interest will accrue on all of your student loans, no matter the loan type.

Takeaway

Regardless if you qualify for deferment or forbearance, either may be a good option to temporarily postpone your student loan payments and get back on your feet. Make sure to seek out both options before you start missing payments. This will save you from additional financial hardships that come along with defaulting on student loans.

Also, consider making payments on any interest accrued while you’re still in deferment or forbearance. This can prevent compounding interest and may save you money over time.