Deferment of Student Loans
A student loan is financial aid given to students by federal, state or local governments, private financial institutions, and banks to help them pay for college tuition, books, and other living expenses. These financial institutes also help in deferment of student loans when you face difficulty in repayment of loans within a given period of time. Deferment lets you temporarily suspend repaying your student loans. By postponing the loan, you promise to resume payments when you are able to pay the amount or when your deferment has expired.
When would I want to defer student loans?
If you find that you are unable to meet your monthly repayments, then you may need to defer payments on your student loans until your financial situation has changed. Don’t feel let down by opting to defer your student loans. Imagine this deferment as a facility to postpone student loans until you complete your education or get employment. The best part is that once you have deferred your loan, you will not be charged any interest on federally subsidized loans. You must request deferment from your lender, but they may ask you to provide supporting documentation. The eligible loans include Federal Stafford, Federal PLUS, and Federal Consolidation Loans.
What are the different types of student loan deferments?
There are total five categories of student loan deferment, and each has its own set of rules. These are listed below:
- Education Deferments:
This category deals with a student’s enrollment status, and at times is referred to as an in-school deferment.
- Economic Deferments:
Economic Deferment consists of economic hardship and unemployment deferment.
- Disability / Rehabilitation Deferments:
The students can get this type of loan deferment if they are receiving rehabilitation training, or are unable to work due to injury.
- Family Leave Student Loan Deferments:
This loan is available to former or present students that are expecting or taking care of a newborn baby and cannot work or attend school.
- Public Service Student Loan Deferments:
This type of loan consists of Military Deferment, Public Health, Peace Corps, NOAA and Tax Exempt Organization, or Volunteer.
How to defer student loans?
Deferment policies vary between lenders, and your capacity to defer your student loans will depend on your situation. You will qualify for deferment of student loans if you meet some specific requirements. After qualifying for the deferment, be sure to ask whether or not interest will grow while your loan is deferred. Do discuss your reasons of deferment with your lender to see all possibilities for repayment that you are not aware of. Be sure to maintain a record of your application, as it is your responsibility to keep track of your deferment status. If you are reaching the end of your deferment period and your financial position has not changed, then you have the chance to reapply for further deferment of three years.
I have heard that deferments can be given for Stafford and Perkins loans, is this really a possibility?
Yes, it is possible to have the Stafford or Perkins loan deferred, but only if a student is attending school at least part time, if the student has been unemployed for the past three years, if the student is part of an approved graduate fellowship or rehabilitation program for the disabled, or if the student is experiencing economic hardship for the past three years.