How Student Federal Loans Deferment Works

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About 48 million Americans have student loan debt. So, it’s not surprising that many people would benefit from having their loans deferred. 

Federal student loan deferment temporarily postpones your federal student loan payments. However, there are some additional details you need to know to ensure that you understand your deferment options entirely. 

How federal student loan deferment works

If you are considering student loan deferral, you might have some questions about the process. It could be difficult to navigate because there are various ways by which people might qualify for deferment. 

For the sake of this conversation, let’s assume you have applied and been approved. Essentially, upon being approved, you will be free from the responsibility of having to make loan payments for a predetermined amount of time. If you find that you need more time once your deferment period ends, you will have to reapply for further deferment assistance. 

Does federal student loan deferment accrue interest?

Not having to make monthly payments can be a huge relief, particularly if you find yourself in a financial bind that causes your student loans payments to be overwhelming. However, it is essential to note that your deferment will not stop interest from accruing. 

Since interest will continue to accrue during your deferment period, any unpaid interest can be added to the original amount of money that you borrowed, which is also known as your principal balance. Though the loan deferment can give you a break from making payments, the continued interest accrual can be an added stressor for some people. 

Does federal student loan deferment affect credit?

Initially, student loan deferment will not affect your credit score, but it could eventually impact your score in the long run. Since interest still grows while your loans are in a state of deferment, your loan balance will continue to increase. 

Essentially, even though you are not required to make payments at this time and you also aren’t being penalized for not making payments, your debt-to-income ratio could still increase. Depending on how long your deferment lasts, this could impact your approval odds. 

However, It is also important to consider that not being able to make your monthly payments could also affect your credit. So, ultimately, the answer is yes and no. Federal student loan deferment can affect your credit but it won’t inherently do so automatically. 

Who is eligible for federal student loan deferment?

Different types of federal student loan deferment have various eligibility conditions. 

Cancer treatment deferment

Cancer treatment deferment allows you to defer your federal loans while receiving cancer treatment as well as for six months following the completion of your treatment. You are required to complete a form that includes your physician’s information. This type of deferment does not have a set time limit seeing as people undergo cancer treatment for varying lengths of time. 

Economic hardship deferment

Economic hardship deferment is an available option for someone who is unable to afford their loan payments. This deferment allows you to stop your payments while still collecting interest, giving you a chance to get your finances together. 

To qualify, you must either receive means-tested assistance such as welfare, serve in the Peace Corps or work full-time while receiving earnings below 150% of the poverty line. Economic hardship deferment has a maximum cumulative deferment of 36 months per loan program.

Graduate fellowship deferment

Suppose you are in an approved graduate fellowship program, which are typically for doctoral studies or, in some cases, Master’s programs. In that case, you could be eligible for a graduate fellowship deferment. 

However, there are additional requirements that your fellowship program must meet, such as a requirement to submit progress reports while you are in the program. You will usually need to provide a clear outline of your fellowship objectives and financial support for at least six months. 

In-school deferment

In-school deferment is one of the easier deferments to qualify for because you typically do not have to submit any paperwork in order to be approved. If you are enrolled in an eligible college or career school at least part-time, you might qualify for an in-school deferment. 

Additionally, suppose you are a student who has received a Direct Plus Loan. In that case, you secure an additional six months of deferment after you complete your program or you are no longer enrolled part-time if not full-time. Again, the deferment should occur automatically, but contact your school if you notice the deferment has not begun yet. 

Military service and post-active duty student deferment

If you are on active duty in connection with a war, military operation or national emergency, you might be eligible. Similarly, if you have completed qualifying active duty service, you could be eligible for military service and post-active duty student deferment. 

The post-active duty deferment ends when you resume enrollment in an eligible college or career school at least part-time. As long as you enroll at least 13 months after the completion date of active duty service and any applicable grace period, military service and post-active duty student deferment could be possible for you. 

Parent PLUS borrower deferment

The Parent PLUS borrower deferment is for parents who received a Direct PLUS loan to help pay for their child’s education. If you took out the loan and the student is enrolled at least part-time at an eligible college or career school, you might qualify for this option. 

A Parent PLUS Borrower Deferment request needs to be completed. Alternatively, you can request a deferment from the school if you are required to submit a Direct PLUS Loan Request form.

Rehabilitation training deferment

Rehabilitation training deferment might be an option if you are enrolled in an approved rehabilitation training program. The program should be designed to provide vocational, drug abuse, mental health or alcohol abuse rehabilitation treatment. 

The rehabilitation program must be licensed, approved and certified by either the Department of Veterans Affairs or a state agency that offers vocational rehabilitation, drug abuse treatment, mental health treatment or alcohol abuse services. The program must also provide services under a written, individualized plan that specifies the date the services are expected to end. It must also require a substantial commitment on your part.  

Unemployment deferment

The unemployment deferment is pretty straightforward. You will likely qualify if you receive unemployment benefits or you are seeking work yet you have been unable to find full-time employment yet. The unemployment deferment can be in place for up to three years. 

How to request federal student loan deferment

Aside from the in-school deferment, most student loan deferments must be requested. First, you must contact your student loan servicer, and they will inform you of the correct form to complete based on your eligibility requirements. 

Once the form is submitted, your loan servicer will notify you as to whether you have been approved or denied. Therefore, it is important to continue paying off your loans until you have received an official approval notification directly from your loan servicer. 

Federal student loan deferment vs student loan forgiveness

Federal student loan deferment and student loan forgiveness are two very different concepts. For starters, federal student loan deferment means you will stop making payments on your loans for a predetermined amount of time with the expectation that you will either reapply when the deferment period ends or you will begin making payments again at that point. 

On the other hand, student loan forgiveness refers to situations where people are no longer required to repay their student loans. In essence, the balance is erased and they are not responsible for their loans anymore. 

Weigh your options 

Student loan payments can be challenging to keep up with, and making consistent payments is something that can become overwhelming. Remember that you have options for deferment, and if you qualify, take the time to consider which option will work best for you. 

Deferring your payments can give you time to get your finances in order while freeing up some funds. Just keep in mind that your interest will still accrue throughout your deferment period, and this can also add stress to the mix, but as always, do what makes the most financial sense for you.


Will student loans be deferred in 2022?

The student loan deferment ends on December 31, 2022. This means that student loans will be deferred for the rest of 2022.

How many deferments are allowed on student loans?

Each deferment has different time limits, which depend on the loan deferment you qualify for as well as the expectations of said type of loan deferment.

Can I pause my student loan payments?

Pausing your payments is the same as deferring them or putting them in forbearance. If you qualify, you are not required to make your monthly payments during the deferment period, though interest will continue to accrue in most cases. 

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