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How to Postpone your Student Loan Repayment – a Loan Deferment

Examining a temporary suspension of loan payments

For most of the college students, repaying student loans is not easy process. According to some reports, average student in the USA holds a debt over $20,000 after graduation.  If you have problems making your student loan payments, you should contact straight away the organization that services your loan since you might qualify for a deferment, forbearance, or other form of payment assistance.

A deferment is a delay of payment on an educational loan. It works as long as your student loan lender is ready to grant you such a deferral, and it is, as a general rule, a more common alternative if you borrow money under the federal student loan plans like Stafford Loan or Federal Perkins Loan. This is for the reason that under the federal student loans deferment time is incorporated even with an automatic six-month period after graduation or failure below half-time status. Under the subsidized Stafford Loan or a Federal Perkins Loan, Direct or FFEL loan, you don’t have to pay interest on your educational loan during deferment. If you have an unsubsidized Direct Stafford Loan or FFEL, you are responsible for the interest during deferment. In case of your failure to pay the interest as it accrues, it will be added to the loan principal, and the amount you’re going repay will be higher. You have to apply for a deferment to the organization that handles your student loan, and you must continue to make payments until you’ve been informed your deferment has been granted. If not, you could become delinquent or go into default. However, there are some private loans which, similar to federal student loans, come with a wide range deferment options, so students can get a deferment for their private student debt also, which depends on his private loan provider’s willingness to grant him such benefit.

There are three categories of student loan deferments: In-School Deferments, Grace-Period Deferments and Out-of-School Deferments.

In-School Deferments

These categories of student loan deferments is put into practice automatically as long as student is attending school on the terms provided within his or her promissory note.

Grace-Period Deferments

These types of deferment are also normally put into effect automatically once student have graduated, or left school for whatever reason. These two types of deferments are available for any of student loan plans.

Out-of-School Deferments

Out-of-school-deferments are not automatically put into effect, for that reason you need to request them from a student loan lender in order to accomplish it. Usually, you can acquire this type of deferment in case you undergo certain life situations that prevent you from regular loan repayment like financial limitations, health issues or unemployment.

To qualify for a student loan deferment you must meet certain requirements:

  • You must not be more than 270 days behind in loan payments (or six months behind for an unemployment deferment on a FFEL),
  • You must be unemployed or meet certain rules for economic hardship (limited to 3 years) or
  • You must be enrolled at least half time in an eligible college or university or study full time in a graduate partnership program or an official disability rehabilitation program.

Military Service Deferment and Post-Active Duty Student Deferment

You may be eligible for a deferment as well if you join the U.S. Armed Forces or National Guard. An active duty military deferment is obtainable to borrowers in the Direct, Perkins Loan and FFEL plans who are called to active duty during a war or other military operation or national emergency. A borrower of a Direct, FFEL, or Perkins Loan who is a member of the National Guard or other reserve part of the U.S. Armed Forces (current or retired) and is called or ordered to active duty while enrolled at least half-time at an eligible school, or within six months of having been enrolled at least half-time, is eligible for a deferment during the 13 months following the conclusion of the active duty service, or until the borrower returns to enrolled student status on at least a half-time basis.

Economic Hardship Deferment

If you are borrower under a Direct, Federal Perkins Loan or FFEL, you may be eligible for an economic hardship deferment which is obtainable for a maximum of 3 years if you are experiencing an economic hardship under to US federal regulations.

How to Apply

To apply for a student loan deferment you are required to submit a deferment request to your loan provider along with documentation of your eligibility for the deferment. You should keep in mind that if you are in default on your loan, you are not eligible for a deferment or forbearance.

In order to make a deferment request, you need to contact your student loan servicer since each loan lender has a different deferment policy. Depending on the lender’s internal policy, you will be able to get your request done online, via phone or filling out a written deferment application. Furthermore, you have to negotiate an actual deferment time you have remaining on your student loan to your loan lender, because the largest part of student loans come with a particular amount of deferment time included. Usually, deferments are granted in six-month periods.

Benefits and Drawbacks of Utilizing Deferments

Deferments are great option in case you are not capable to make a payment on your student loan for no matter what reason and don’t mind pushing back the time it takes to repay your loan. On the other hand, utilizing deferment may be “saving” money option in the short-run, but bear in mind that you are in essence postponing the term of your loan, which may result in a higher overall loan cost. Anyway, it is recommended that you don’t hesitate to use your deferments if it comes to an alternative between letting your student loans fall into default, and delaying when your loan will be repaid.

When you are taking a student loan, be aware of the amount of deferment period that comes with a particular loan option. This will allow you to plan things better over time and make you feel secure in case you have to postpone your educational loans repayment for whatever reason.

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