Deferment

"Deferment" submitted by SchoolGrantsfor Editorial Team and last updated on Monday 9th January 2012

Loan deferment occurs when you are allowed to temporarily postpone repaying a loan. If you have a subsidized loan, the federal government pays the interest charges during the deferment period. If you have an unsubsidized loan, you are responsible for the interest that accrues during the deferment period. You can still postpone paying the interest charges by allowing the interest to capitalize, something that increases the size of the loan. Most federal loan programs allow students to defer their loans while they are in school at least half-time. If you do not qualify for a deferment, you may be able to get a forbearance. You cannot get a deferment if your loan is in default.

You will be issued a deferment (a temporary postponement of my loan payments) if you are eligible for it, apply for it and receive verification of acceptance. Ask your lender about changing your repayment plan, or consolidating or combining your loans. You can also look into a deferment or a forbearance to temporarily postpone, reduce or extend your payments.

Postponing Loan Repayment (Deferment and Forbearance)

Under certain circumstances, you can receive periods of deferment or forbearance that allow you to postpone loan repayment. These periods don’t count toward the length of time you have to repay your loan. You can’t get a deferment or forbearance for a loan that is already in default. More Details in Deferment and Forbearance at a Glance as Repayment plans: Which one better? Deferment Options for Stafford (Direct and FFEL) and Perkins Loans

Qualify for a deferment

To qualify for a deferment, you must meet specific eligibility requirements. Interest does not accrue (accumulate) on subsidized Stafford Loans during a deferment period, but you are responsible for paying the interest that accrues during a deferment on unsubsidized Stafford Loans. If you don’t pay the interest that accrues on an unsubsidized Stafford Loan during a deferment period, it will be capitalized (added to the loan principal balance) at the end of the deferment.

The most common loan deferment conditions are enrollment in school at least half-time, inability to find full-time employment (for up to three years), economic hardship (for up to three years), and military service (see below).

Military service deferments

An active duty military 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, or performing qualifying National Guard duty during a war or other military operation or national emergency, and, if the borrower was serving on or after Oct. 1, 2007, for an additional 180-day period following the demobilization date for the qualifying service.

A 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 enrolled at least half-time at an eligible school or within 6 months of having been enrolled at least half-time is eligible for a 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.

Can parents or graduate and professional degree students defer repayment of their PLUS Loan and Perkins loans? Whats the difference?

Federal Plus Loan

In case of Federal PLUS Loans for Parents, repayment begins within 60 days of the loan’s last disbursement. You can defer payments until your child ceases to be enrolled at least half time and during the six-month, post-enrollment period. Interest accrues during deferment. And In case of Federal PLUS Loans for Graduate Students (Grad PLUS) repayment begins within 60 days of the loan’s last disbursement. You can postpone repayment while you’re in school at least half time, and during the six-month, post-enrollment period. Interest accrues during deferment.

Generally, the same deferment provisions that apply to Stafford Loans apply to PLUS Loans. Because PLUS Loans are unsubsidized, parents and graduate and professional degree students will be charged interest during periods of deferment. If they don’t pay the interest as it accrues, it will be capitalized (added to their outstanding principal balance). Parent PLUS borrowers may defer repayment of PLUS Loans first disbursed on or after July 1, 2008, while the student for whom the loan was obtained is enrolled at least half-time, and for an additional six months after the student ceases to be enrolled at least half-time. PLUS loans are not based on income or assets. Payments should not debts delinquent 90 days or more. No defaulted loans, outstanding tax liens, unpaid judgments, bankruptcy, foreclosure or wage garnishment within the past five years.

Deferment (Perkins Loans)

Loan deferment occurs when you are allowed to temporarily postpone repaying a loan. Interest is not charged during deferment for Perkins Loans. In order to receive a deferment, you must request a deferment from your school or its billing service, complete the form with all required documentation, and return it promptly to your school or its billing service. Your school will determine if you are eligible for a deferment.

The Loan Deferment Summary Chart shows Stafford and Perkins Loan deferments for loans disbursed on or after July 1, 1993:

  Perkins Loans Stafford Loans
Deferment Condition   Direct Loans *,** FFEL Loans *,***
At least half-time study at a postsecondary school YES YES YES
Study in an approved graduate fellowship program or in an approved rehabilitation training program for the disabled YES YES YES
Unable to find full-time employment Up to 3 Years Up to 3 Years Up to 3 Years
Economic hardship (includes Peace Corps Service) Up to 3 Years Up to 3 Years Up to 3 Years
Engages in service listed under discharge/cancellation conditions YES *** NO NO
Active Military Duty while borrower is on active duty during a war or other military operation or national emergency and if the borrower was serving on or after Oct. 1, 2007, for an additional 180-day period following the demobilization date for the qualifying service YES YES YES
For a 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 enrolled at least half-time at an eligible school or within 6 months of having been enrolled at least half-time, 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 YES YES YES

Number of Sign(*) denotes:
* For PLUS Loans and unsubsidized Staff ord Loans, only principal* is deferred. Interest continues to accrue.
** A Direct Loan borrower who had an outstanding balance on a FFEL Loan fi rst disbursed before July 1, 1993, when the borrower received his or her fi rst Direct Loan, is eligible for additional deferments.
*** More information on teaching and other types of service deferments and cancellations can be found online at http://www.FederalStudentAid.ed.gov. At the site, click on “Students, Parents and Counselors.”

You may also check:
Financial aid for Military and Their Dependents
Federal Grants for Iraq and Afghanistan Military and Their Dependents
Stafford Loan Forgiveness For Military
Lon Repayment options For Military and Their Dependents
Avoid Military and Their Dependents Delinquency and Default
Military Before and After College

For information on deferments for loans received before that date, Direct Stafford and PLUS Loan borrowers should contact the Direct Loan Servicing Center at 1-800-848-0979. TTY users should call 1-800-848-0983. Or, go online at www.dl.ed.gov. FFEL Stafford and PLUS Loan borrowers should contact their lender. For more information on deferments, contact your lender or the financial aid office at your school.

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