Would you like to hit pause on your federal student loans payments?
Reach out to your lender and find out if you qualify for a deferment or forbearance of your student loan payments.
Deferment postpones the payments of your federal loans and is allowed in certain situations.
Forbearance stops your student loan payments or reduces your monthly payment amount for up to 12 months.
Qualifying for Deferment
During deferment, the repayment of the principal and interest on your student loan is temporarily delayed.
And if you have a Federal Perkins Loan, a Direct Subsidized loan or a Subsidized Federal Loan, the federal government may even pay the interest on your loan during your deferment period.
Deferments are allowed in certain situations including:
- When you attend college classes at least half-time.
- When you attend an approved graduate fellowship program.
- When you serve in the U.S. armed forces and the 13 months after your qualifying military service.
- When you serve as a member of the National Guard or other reserve component of the U.S. armed forces.
Deferments for up to three years also are allowed during times of financial hardship including during service in the Peace Corps and during periods of unemployment or when you are unable to find a full-time job.
If you are struggling to pay your student loans but don’t qualify for a deferment, reach out to your lender about a temporary forbearance of your student loan payments.
Forbearance will either stop your student loan payments or lower your monthly payment amounts for up to 12 months.
You may request forbearance from your lender because of a financial hardship or illness.
And there are certain circumstances when it is mandatory for a lender to grant you the forbearance that you request on your student loans.
These circumstances include:
- When the total amount you owe each month on your student loans is 20 percent or more of your total monthly gross income
- When you are serving in a national service position such as AmeriCorps.
- When you are serving in a teaching program that qualifies you for loan forgiveness.
- When you are serving in a medical or dental internship or residency program and you also meet specific requirements.
If you are unable to qualify for deferment or forbearance, discuss with your lender the option of changing your repayment plan and lowering your monthly payment.
Putting your student loans into deferment or forbearance will not hurt your credit score. However, interest will continue to accrue on your loans while your payments are paused unless the lender tells you otherwise. It’s also extremely important to make sure you continue to pay your loans until you’re notified that your deferment or forbearance is in place.
Finally, if your situation improves but you still struggle to make your payments, talk with the lender to see if you qualify for a repayment plan so you can continue to make progress on your loans in a way that doesn’t create a hardship for you. Consolidating your student loans may also lower your payments.
If you’re wondering how your student loans are affecting your credit, Credit.com’s free tools give you two credit scores updated every month, along with a breakdown of what’s affecting your scores and a plan to help you get your credit in better shape.