Getting through college is a lot of work, and then when you graduate, it’s time to find a job so you can pay for the things you need. There’s rent, food, car payments, cell phone bills, student loans… the list doesn’t seem to stop. Wouldn’t it be nice if you could hit pause on your federal student loan payment? Well, you’ll be happy to know that it just might be possible to do that.
How to Put Your Student Loan Payment on Hold
The first thing to do if you want to pause your student loan repayment is to reach out to your lender (or lenders) and find out if you qualify for a deferment or forbearance.
What does that mean? Well, deferment of your student loan(s) postpones the payments of your federal loans and is allowed in certain situations (more on this in a minute). 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 part-time
- Attend an approved graduate fellowship program
- Serve in the U.S. armed forces and the 13 months after your qualifying military service
- 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, all hope is not lost. You can consider talking with your lender about a temporary forbearance of your student loan payments.
As we mentioned, forbearance will either stop your student loan payments all together, or lower the monthly payments, while you get yourself back on your feet financially. This does come with a time limit, however, which is important to keep in mind. Forbearance of your student loans can only last 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, which includes when:
- The total amount you owe each month on your student loans is 20% or more of your total monthly gross income
- You are serving in a national service position such as AmeriCorps
- You are serving in a teaching program that qualifies you for loan forgiveness
- You are serving in a medical or dental internship or residency program and you also meet specific requirements
What Pausing Your Student Loan Payments Does to Your Credit Scores
Putting your student loans into deferment or forbearance will not hurt your credit scores. However, interest will continue to accrue on your loans while your payments are paused unless the lender tells you otherwise. (Make sure you ask about finer details like this so you know what to expect.) It’s also extremely important to make sure you continue to make on-time payments on your loans until you’re notified that your deferment or forbearance is in place so you don’t get hit with late fees or damage your credit.
If you’re wondering how your student loans are affecting your credit, you can see two of your credit scores for free on Credit.com. Having student loans can help diversify your credit profile, but, as we already mentioned, it’s important to pay them on time so you don’t damage your credit. Having good credit can help you get good terms and conditions on future loans (like for a new car or house) or lines of credit.
Alternative Ways to Make Your Student Loan Payments
If you are unable to qualify for deferment or forbearance, you may consider talking with your lender about other options. This could include changing your repayment plan and lowering your monthly payment to help make things more manageable. This way, 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 and could be worth looking into, depending on your situation.
This article has been updated. It was originally published August 22, 2014.