Student Loan Deferment

One of the most stressful realities of financial misfortune is that you often have to deal with several financial strains at a time. A job lay-off isn’t an “only” problem; it’s a problem that causes other financial difficulties to follow. Even if you haven’t lost your job, other financial obligations may strain your income. If student loans are part of the debt you’re carrying, you may qualify for federal programs that allow you to postpone, or defer, your student loan payments until your financial situation improves. Similar to other federal assistance programs, student loan deferment is intended to allow you to cover your basic living expenses without the added burden of student loan debt.

The U.S. Department of Education offers the following advice to financially strapped families carrying student loans:

If Repaying Your Student Loan is One Expense Too Many

If you’re having trouble making your student loan payments or are getting close to more than 90 days delinquent on your payments, you are in danger of defaulting on your loan. You should immediately get in touch with the loan program you got the loan from. Under economic hardship circumstances, you may qualify for a student loan deferment, student loan forbearance, or other form of payment relief.

It is very important to contact your student loan financial institution as soon as you think you may run into trouble, before you are charged late fees or default on your student loan.

Student Loan Deferment

A deferment is a temporary freeze on loan repayment during specific situations such as unemployment, economic hardship, or reenrollment in school. If you have a subsidized FFEL or Direct Stafford Loan or a Federal Perkins Loan, the federal government will pay interest on your loan during deferment. If you have an unsubsidized FFEL or Direct Stafford Loan, however, you will be responsible for paying the interest during deferment. If you don’t pay the interest as it accrues (accumulates), it will be added to your loan balance and the amount you have to pay after the deferment will be higher.

You must apply for a student loan deferment with your loan provider (the organization that handles your loan), and you must continue to make your loan payments until your bank tells you they’ve given you a deferment. Otherwise, you may be charged late fees or go into default.

Economic Hardship Student Loan Deferment

A FFEL, Direct Loan, or Federal Perkins Loan borrower may qualify for a student loan deferment for a maximum of three years if you’re experiencing economic hardship as defined in federal regulations. If your student loan payments equal more than 20% of your gross monthly income, you may qualify for the federal economic hardship deferment. Other conditions that may allow you to qualify for an economic hardship deferment include receiving payment under a federal or state public assistance program, such as Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Food Stamps, or state general public assistance. You should contact your lender as quickly as possible to get the appropriate paperwork for figuring out if you qualify.

Military Service Student Loan Deferment

An active duty military student loan deferment is available to borrowers in the FFEL, Direct Loan, and Perkins Loan programs who are called to active duty during a war or other military operation or national emergency. This deferment is available while the borrower is serving on active duty during a war or other military operation or national emergency, performing qualifying National Guard duty during a war or other military operation or national emergency, and, if the borrower was serving on or after October 1, 2007, for an additional 180-day period following the demobilization date for the qualifying service.

Active Duty Student Deferment

Effective October 1, 2007, a FFEL, Direct Loan, or Perkins Loan borrower who is a member of the National Guard or other reserve component of the U.S. Armed Forces (current or retired) and is called or ordered to active duty while a student enrolled at least half-time at an eligible school, or within six months of having been enrolled at least half-time, is eligible for a student loan deferment during the 13 months following the conclusion of the active duty service, or until the borrower returns to enrolled student status on at least a half-time basis, whichever is earlier.

Student Loan Forbearance

If you do not qualify for a student loan deferment, you may still be eligible for the student loan forbearance program, which is another type of temporary loan repayment postponement due to financial difficulty. Under loan forbearance, unlike deferment, you are responsible for paying for all accrued interest on you loan, subsidized and unsubsidized. Loan forbearance is typically granted for up to 12 months at a time for up to 3 years. You have to apply to your loan provider for student loan forbearance, and you must continue to make your loan repayments until your bank lets you know the forbearance period has begun.

Generally, the same eligibility requirements and procedures for requesting a deferment or forbearance that apply to Stafford Loan borrowers also apply to PLUS Loan borrowers. However, since all PLUS Loans are unsubsidized, you’ll be charged interest during either deferment or forbearance. If you don’t pay the interest as it accrues, it will be added to your loan balance.

Federal Student Loan Deferment Resources

If you’re having trouble with student loan payments, contact your loan servicer immediately. If you don’t know whom to contact, find your federal student loan account information at the National Student Loan Data System (NSLDS), the U.S. Department of Education’s central database for student aid.

  • For Federal Perkins Loans, contact your loan servicer or the school that made you the loan.
  • For FFEL Loans, contact the lender or agency that holds your loan.
  • For Direct Loans, including loans taken out before July 1, 1993, contact the Direct Loan Servicing Center at 1-800-848-0979 or 1-315-738-6634. TTY users should call 1-800-848-0983.

If you have already contacted your loan servicer(s) and you haven’t been able to get help, contact the Federal Student Aid Office of the Ombudsman at 1-877-557-2575 as soon as possible.

Source: “Difficulty Repaying,” Student Aid on the Web