What is deferment?
A deferment is a period during which repayment of the principal and interest of your loan is temporarily delayed.
What happens to my loan during deferment?
During a deferment, you do not need to make payments. What’s more, depending on the type of loan you have, the federal government may pay the interest on your loan during a period of deferment.
The government may pay the interest on your
- Federal Perkins Loan,
- Direct Subsidized Loan, and/or
- Subsidized Federal Stafford Loan.
The government does not pay the interest on your unsubsidized loans (or on any PLUS loans). You are responsible for paying the interest that accrues (accumulates) during the deferment period, but your payment is not due during the deferment period. If you don’t pay the interest on your loan during deferment, it may be capitalized (added to your principal balance), and the amount you pay in the future will be higher.
How do I request a deferment?
Most deferments are not automatic, and you will likely need to submit a request to your loan servicer, the organization that handles your loan account. If you are enrolled in school at least half-time and you would like to request an in-school deferment, you’ll need to contact your school’s financial aid office as well as your loan servicer.
Your deferment request should be submitted to the organization to which you make your loan payments.
- Direct Loans and FFEL Program loans: contact your loan servicer
- Perkins Loans: contact the school you were attending when you received the loan
What is forbearance?
If you can't make your scheduled loan payments, but don't qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans).
There are two types of forbearances:
- Discretionary
- Mandatory
Discretionary Forbearance
For discretionary forbearances, your lender decides whether to grant forbearance or not.
You can request a discretionary forbearance for the following reasons:
- Financial hardship
- Illness
Mandatory Forbearance
For mandatory forbearances, if you meet the eligibility criteria for the forbearance, your lender is required to grant the forbearance.
You can request a mandatory forbearance for the following reasons:
- You are serving in a medical or dental internship or residency program, and you meet specific requirements.
- The total amount you owe each month for all the student loans you received is 20 percent or more of your total monthly gross income (additional conditions apply).
- You are serving in a national service position for which you received a national service award.
- You are performing teaching service that would qualify for teacher loan forgiveness.
- You qualify for partial repayment of your loans under the U.S. Department of Defense Student Loan Repayment Program.
- You are a member of the National Guard and have been activated by a governor, but you are not eligible for a military deferment.
How do I request a forbearance?
Receiving loan forbearance is not automatic. You must apply by making a request to your loan servicer. In some cases, you must provide documentation to support your request.
What happens to the interest on my loan during forbearance?
Interest will continue to be charged on all loan types, including subsidized loans.
You can pay the interest during forbearance or allow the interest to accrue (accumulate). If you don’t pay the interest on your loan during forbearance, it may be capitalized (added to your principal balance), and the amount you pay in the future will be higher.
source: studentaid.ed.gov
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