Can I Defer My Student Loans and Take a Semester Off?
Getting a deferral of payment for your student loans to take a semester off school depends on your lender and the type of loan you have. Deferments for federally-insured Stafford, Perkins or Federal Parent PLUS are different from deferrals from private lending institutions. Applying for deferment for federally-insured student loans may not be necessary when taking one semester off school.
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Federally-Insured Loans
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If you have federally-insured loans, you have a grace period of six months from the time you stop attending school before you have to begin making payments. This generally applies to graduation or leaving school. If you only plan on taking one semester off, it is not necessary to file for a deferment because one school semester does not last six months. However, once you do not enroll in classes, your school notifies your lender and this triggers the six-month grace period. When you go back to school, you have to file an in-school deferment to put off making your student loan payments until after you graduate.
Private Lenders
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The repayment grace period for private lenders varies widely. Some lenders give you six months from the time you stop going to school before you have to begin making payments, while others give you six weeks. It is important that you examine your loan paperwork to determine your repayment grace period. You then must contact your lender to discuss deferment options. If your grace period is longer than the time you plan on taking off, not enrolling can trigger the repayment grace period. Not all lenders offer an in school deferment once you re-enroll, so it is very important that you contact your lender to discuss your deferment options.
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Economic Hardship
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If you are taking a semester off because you are currently experiencing an economic hardship, it is possible to receive a deferral of payments for both private and federally-insured loans. The qualifications for an economic or financial hardship deferral vary by lender and loan type. Generally, you have to provide proof, or an explanation, of your current financial situation, as well as income information if you are currently working. If you are on any type of public assistance, your lender may also require proof of assistance payments or vouchers. The length of economic hardship deferrals vary by lender and loan type.
Considerations
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If you defer your payments, your interest will accrue during the deferment period, which can lead to a higher overall outstanding loan amount. If you do defer your payments, you may want to consider making just the interest payment to avoid increasing your outstanding student loan debt. It is also a good idea to speak to your financial aid advisor or counselor to discuss student loan payment deferral before you take a semester off of school.
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