How to Defer School Loans

You have the option of deferring your school loans.

Sometimes new graduates find it difficult to pay back their student loans, especially if they are having difficulties finding a job or if they are dealing with a temporary disability. Options exist for those who are unable to pay back their student loans. People who have school loans have the right to ask that their loan payments be temporarily deferred or postponed. You must meet certain requirements if you are interested in getting your loan payments deferred. The amount of time your payments are deferred depends on your reasons for deferment.

Things You'll Need

• Promissory note

Instructions

1. Decide if deferment is your only option. If you are experiencing economic hardship, it might be possible for you get an extended payment plan with your lender, which could lower your monthly payments and you would not need to defer your loans. Keep in mind that lowering your monthly payment will cause you to pay more interest because you will be extending the life of the loan.

2. Find your promissory note and other documents that you received when you first applied for your student loan. The deferment plan for which you may be eligible will depend on when you first got your loan. Borrowers who received loans after July 1, 1993, can apply for student loan deferment if they are returning to school (to at least half-time status), are unemployed, experiencing economic difficulty or are in the military. Teachers who work in low-income areas are also eligible for deferment.

3. Contact your lender to determine for which deferment plan you are eligible. Find out what documents you may need to send to your lender. You can also check your lender's website to see what options you have. You might be able to download the forms you need from the website.

4. Get a copy of your tax forms, pay stubs and other documents if you are applying because you are experiencing financial hardship. If you are applying for deferment because you decided to return to school, your lender may request a copy of your transcript.

5. Send in your deferment application. It can take up to 90 days to finalize the student loan deferment process. You still need to make payments on the loans you have until you have completed the deferment process.

6. Remember interest can still accrue on the loan while it is in deferment. If you decide not to pay the interest, it can be added on to the principal balance on the loan, and your monthly payments will increase. This may be more costly for you in the long term. If possible, try to pay the interest on your loan if it is in deferment. If you have subsidized loans, you will not accrue interest while they are deferred.

Tips & Warnings

• If you are not eligible for a deferment, you can apply for forbearance. Unlike a subsidized deferment, interest will accrue on unsubsidized and subsidized loans if you apply for a forbearance.

References

• Sallie Mae: Understanding student loan deferment