Different deferments have different criteria:
- Unemployment, extreme economic hardship, enrolling in school at least half-time or active military duty may qualify you.
- If you meet the criteria and have deferment time available, you cannot be denied a deferment.
- During a deferment, the federal government pays any interest that accrues on your subsidized loans, but not on unsubsidized loans. Unsubsidized interest on deferred loans can increase the amount you owe overall.
If you don’t meet the criteria for a deferment, you may qualify for forbearance:
- In most cases, forbearance is granted solely at the discretion of your lender or servicer.
- Forbearances are usually reserved for cases of financial hardship or illness.
- Unlike a deferment, in forbearance both subsidized and unsubsidized portions of your loan continue to accrue interest.
- At the end of the forbearance period, the interest is capitalized (added to the principal balance of the loan).
- Forbearance increases the amount you owe.
Deferment and forbearance are both preferable to missing loan payments. But, because forbearance increases the amount you owe, try to first qualify for a deferment.
Also, before postponing repayment, see if it makes sense for you to lower your payments with a different repayment schedule. This can save you money and preserve your deferment and forbearance eligibility for situations when you really need it. There are limits to how much deferment and forbearance time you can use.
Under certain circumstances, borrowers may receive a deferment or forbearance that temporarily postpones or reduces student loan payments. Postponing or reducing payments may help a borrower avoid defaulting on a student loan. Borrowers must work with their loan servicer to apply for deferment or forbearance.
Deferment is a period during which repayment of the principal and interest of a student loan is temporarily delayed. During deferment, loans will continue to accrue interest. The borrower is responsible for paying the interest that accrues during deferment, but payments are not due during the deferment period. This means that any interest accrued during deferment will be added to the principal balance of the loan, and the amount of the student loan payment after deferment will be higher.
Deferment options for federal loans vary depending on the type of loan and date the loan was incurred. You can get the following deferments for most loans:
- In-school deferments for at least half-time study
- Graduate fellowship deferments
- Rehabilitation training program deferment
- Unemployment deferment not to exceed three years
- Economic hardship deferment, granted one year at a time for a maximum of three years
- Cancer treatment deferment
- Military deferment
There are several other deferments available in the Perkins program only.
You can request a deferment form from your loan servicer. Selected forms are also available here and on the Department of Education web site. You should contact your guaranty agency or school if you have a different type of loan. You should continue paying while your application is pending.
Economic Hardship Deferment
The economic hardship deferment is granted one year at a time for a maximum of three years.
The first three qualification categories are “automatic” if you can provide supporting documentation. These three categories are:
- Previous qualification for economic hardship deferment under another federal loan program.
- Receipt of federal or state public assistance benefits. This includes payments under a federal or state public assistance program such as TANF, SSI, Food Stamps, or state general public assistance.
- You qualify if you are serving as a Peace Corps volunteer.
You can also qualify based on your income if you are working full-time, or your monthly income does not exceed the larger of the federal minimum wage rate, or 150% of the poverty line income for your family size and state. (In 2018, the poverty line for a family of two living in the 48 contiguous states was $16, 460).
Borrowers should use this form when applying for an economic hardship deferment.
Most deferments do not happen automatically, and borrowers will likely need to submit a request to the loan servicer. For in-school deferments (enrolled at least half-time), many schools will submit enrollment status to the National Student Loan Clearinghouse, which in turn notifies loan servicers of a borrower’s enrollment status. However, it is the borrower’s responsibility to ensure that deferments are properly posted, and the borrower should contact the school’s financial aid office, as well as the loan servicer.
If a borrower is unable to make scheduled loan payments and is not eligible for a deferment, the loan servicer may grant a forbearance. Forbearance is a period in which payments will be postponed or reduced for up to 12 months. During forbearance, loans will continue to accrue interest. The borrower is responsible for paying the interest that accrues during forbearance, but payments are not due during the forbearance period. This means that any interest accrued during forbearance will be added to the principal balance of the loan, and the amount of the student loan payment after forbearance will be higher.
There are two types of forbearances:
- Discretionary—the lender decides whether to grant forbearance. The forbearance can be requested for financial hardship or illness.
- Mandatory—the lender is required to grant the forbearance.
The forbearance can be requested for:
- Serving in a medical or dental internship or residency program and specific requirements are met.
- Total amount owed each month for all student loans is 20% or more than the total monthly gross income. (additional conditions apply).
- Serving in a national service position for which a national service award was received.
- Performing a teaching service that would qualify for teacher loan forgiveness.
- Qualifying for a partial repayment of loans under the U.S. Department of Defense Student Loan Repayment Program.
- Serving as a member of the National Guard and having been activated by a governor but not being eligible for a military deferment.
Receiving loan forbearance does not happen automatically, and borrowers will need to submit a request to the loan servicer. In some cases, a borrower must submit supporting documentation to apply for forbearance.
Borrowers that have made 120 payments on Direct Loans (after Oct. 1, 2007) while employed full-time in certain public service jobs may be eligible to have the remaining balance owed forgiven. Only payments made under certain repayment plans may be counted toward the required 120 payments. Borrowers must not be in default on the loans that are forgiven.
Examples of Public Service Jobs
A not-for-profit organization that is not exempt under section 501(c) (3) of the Internal Revenue Code must provide one of the following public services:
- Emergency management
- Military service: service on behalf of the U.S. armed forces or the National Guard
- Public safety
- Law enforcement: crime prevention, control or reduction of crime, or the enforcement of criminal law
- Public interest law services: legal services provided by an organization that is funded in whole or in part by a local, state, federal, or tribal government
- Early childhood education: includes licensed or regulated childcare, Head Start, and state-funded prekindergarten
- Public service for individuals with disabilities and the elderly
- Public health: includes nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health support occupations, as such terms are defined by the Bureau of Labor Statistics
- Public education
- Public library services
- School library or other school-based services
Loans eligible for PSLF
All Direct Loans are eligible, including:
- Emergency management.
- Direct Subsidized Loans.
- Direct Unsubsidized Loans.
- Direct PLUS Loans (for parent PLUS borrowers, the parent borrower must qualify for PSLF).
- Direct Consolidation Loans.
Repayment requirements for PSLF
Qualifying repayment plans include all of the income-driven repayment plans (plans that base your monthly payment on your income).
Even though the 10-year Standard Repayment Plan is also a qualifying repayment plan for PSLF, you cannot receive PSLF unless you enter an income-driven repayment plan. Here’s why: If you are in repayment on the 10-year Standard Repayment Plan during the entire time you are working toward PSLF, you will have no remaining balance left to forgive after you have made 120 qualifying PSLF payments. Therefore, if you are seeking PSLF and are not already repaying under an income-driven repayment plan, you should change to an income-driven repayment plan as soon as possible.
Be sure to consider whether an income-driven repayment plan is right for you before deciding to repay your federal student loans using those plans.
It's important to understand that the Standard Repayment Plan for Direct Consolidation Loans is not the same repayment plan as the 10-Year Standard Repayment Plan, and payments made under the Standard Repayment Plan for Direct Consolidation Loans do not usually qualify for PSLF purposes.