If you’re a current student or recent graduate, making your student loan payments is a daunting prospect. Even if you have a job, that doesn’t mean you have the income to support what can be a sizable obligation. However, student loan deferment can help.
It’s also possible for professionals to struggle with student loan debt. A surprise financial hardship can make it hard to keep up, and it often seems that you have very few options for help.
In some cases, student loan deferment can provide some reprieve from your obligation, even from student loan interest. If you’re struggling to keep up with your payments, here are five student loan deferment tips that you need to know.
1. You Don’t Have to Be a Student to Qualify for Deferment
Most people who have federal student loans know a little about deferment. While you are in school, maintaining at least a half-time schedule, you automatically qualify. This keeps payments from being owed while you pursue your education.
But, other people can qualify too. For example, if your unemployed or, in some cases, underemployed, you may be eligible. Those experiencing economic hardship can also qualify. If you are serving in the Peace Corps or performing certain forms of military service, deferment may be an option for you too.
The rules for qualifying are strict, so you need to see how your personal situation applies.
2. Deferment Doesn’t Stop All Interest
If you enter into a student loan deferment arrangement, you may not owe interest on some of your loans, but will on others. Typically, you aren’t responsible for accrued interest on federal subsidized loans. However, on federal unsubsidized loans, you will need to handle the interest.
Now, this doesn’t mean you have to actively pay the interest while in deferment. Just understand that it adds to your balance, and interest will accrue on those interest charges as long as they do unpaid.
This means, if you can, paying down the interest, even while in deferment, is a smart move. It lowers your total debt obligation and can keep your balance from rising any further.
3. You Have to Request a Deferment After Your Grace Period
While you’re a student, your deferment is essentially automatic. However, after you leave school and your grace period ends, you have to apply for further deferments.
Generally, you’ll need to contact your loan servicer directly, and likely complete some paperwork. You may have to send additional documentation to support your request, particularly for financial hardship or unemployment-related requests.
4. Private Loans Have Different Rules
It’s important to know that private student loans can have different rules in comparison to federal ones. They might not have as many deferment options, and each lender can handle their standards differently.
For deferment on private loans, you’ll need to reach out to your lender specifically to find out their rules. Usually, this information is available in your loan terms, online, or over the phone.
5. Apply Quickly If You are in Trouble
If you can’t pay your student loans and might qualify for a deferment, reach out to your lender as quickly as possible. Often, it’s better to arrange for deferment than to miss payments, which can lead to delinquency or default, both of which harm your credit score.
The faster you reach out, the better. If your financial situation improves, you can always contact your lender and resume your normal schedule, so it’s best not to delay if you run into trouble.
Looking for more great articles from The Free Financial Advisor? Here are a few to get you started:
- Paying Student Loans: Learn Why to Pay Federal and Private Student Loans Faster
- Tips on How to Get Out of Debt Easily When on a Low Income
- Is a Debt Management Program Right for You?
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
student loans are one of the most crippling debts that college graduates have accrued. Often, it’s not the amount of the original loan that causes difficulty with repayment but the punishing interest rate on the loan combined with stagnant wages.