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What is student loan deferment?

Student loan deferment is an excellent option for people who are struggling to make their student loan payments. It allows you to pause your payments while still staying in school or maintaining a low-income job. However, some requirements must be met before you can qualify for this program. In this post, we will discuss what student loan deferments are and how they work. We will also discuss the benefits of applying for one and any potential drawbacks that come along with it!

What is the student loan deferment?

One of the benefits of having student loans is that borrowers can use deferment. This will allow them to postpone repaying their loan until after they leave college or graduate school, whichever comes first.

The main benefit of this is that it helps students avoid defaulting on their loans and getting sued by creditors because one missed payment means an unpaid account. Another important note about deferment is that interest doesn’t accrue during this time, so there won’t be any added fees for not paying your balance every month, which could lead to more debt than before if left unaddressed long enough.

As with all situations involving money, you should consider how much interest has accumulated since you started receiving these funds to know if you are financially stable enough to stop making payments.

What do I need?

Not all borrowers qualify for student loan deferment programs; however, many do qualify if they meet specific criteria:

You must be enrolled in a qualifying repayment plan, such as income-driven repayment (IDR), Pay As You Earn (PAYE), or Revised Pay As You Earn (REPAYE). Your loans also need to be eligible: Federal Perkins Loans and any other types of federal student loans except for Direct PLUS Loans qualify. Private student loans are available if their lender participates in the deferment program; otherwise, they will not be eligible. Lastly, your school needs to participate by offering this option to its students!

The requirements you meet depend on which type of deferment you are applying for: mandatory or discretionary. A mandatory one is typically granted automatically when specific criteria have been met. In contrast, a discretionary one requires an application process where different factors will be considered before you can receive it.

How to get enrolled in the program?

As mentioned above, you can apply for a deferment through your loan servicer. They will help determine whether or not you qualify and assist with the application process if necessary. In addition, your school’s financial aid office may also be able to provide more information and assistance in applying!

It would be best to always explore all of your options before choosing student loan deferments. For example, it is often better to enroll in an income-driven repayment plan instead of where you pay based on how much you earn rather than what your balance was at any given time.

This option helps borrowers stay afloat even when they are struggling financially, whereas a deferment does not do this automatically. However, both programs have their benefits, depending on which one works best for each individual’s unique situation.

What are the types of deferment?

Economic hardship deferment

Applies to borrowers that are having a tough time financially. You must apply for this type of deferment, and it generally lasts up to 12 months at a time with one possible extension.

Military service deferment

Allows you to pause your student loan payments if you have been called into active duty military service or in the event where there is a national military emergency.

Federal student loan deferment

It covers several circumstances, including economic hardships, unemployment, graduate fellowship training, or teaching requirements in specific locations. You must apply for this type of deferment, and it generally lasts up to 12 months at a time with one possible extension.

Graduate fellowship deferment

Allows you to pause your student loans if you are enrolled in an eligible graduate fellowship program. You must apply for this type of deferment, and it generally lasts up to 12 months at a time with one possible extension.

Benefits of being on a deferment plan

There are many different reasons why you should consider applying for a deferment even if your loans do not qualify:

You can pause your student loan payments, which may give you time to catch up on other bills or focus more of your attention on finding employment instead of worrying about how much money is due each month.

You can also use this as an opportunity to explore income-driven repayment plans that help reduce what needs to be paid back based on current financial circumstances; however, keep in mind there still will be interest charged during this period. However, your credit score does not take any hits (unlike with forbearances) since no payment was missed and has been deferred until later. In addition, the government pays all or a portion of the interest that accrues during this time if you have a subsidized loan!

What are the drawbacks to student loan deferments?

  • The government doesn’t pay all of your accrued interest, so you will have to cover it yourself.
  • Your grace period requires payment before what is due each month may be put off.
  • You can only apply for one deferment per federal student loan at a time (except in cases where death or total and permanent disability has occurred); however, you can still make up missed payments afterward by making larger payments over several months.
  • The length of your repayment term increases since everything is postponed, meaning more money could end up going towards back the principal amount versus just the interest.

How to apply for deferment?

If you are interested in applying, your loan servicer will help determine if you qualify and can assist with the application process. You should also speak with someone from your school’s financial aid office as they may have more information about this program or know who else on campus can help!

There is typically no cost involved when it comes to these types of programs. However, if anyone charges fees during this process, contact them immediately so that errors don’t occur since, many times, those costs do not need to be paid back either!

Lastly, always explore all of your options first before settling on student loan deferments because income-driven repayment often offer a better solution, whereas a

Recommendation for getting into the program if you need it.

If you cannot make your payments, contact your loan servicer immediately to see if they offer student loan deferment. They will help determine whether or not you qualify and assist with the application process if necessary.

Your school’s financial aid office may also be able to provide more information as well as assistance in applying!

It would be best to always explore all student loan repayment plans before choosing student loan deferments. It is often better to enroll in an income-driven repayment plan instead of where you pay based on how much money you make rather than what your balance was any given time. This option helps borrowers stay afloat even when they are struggling financially, whereas a deferment does not do this automatically.

However, both programs have their benefits, depending on which option you are more comfortable with. If there is any fee or cost to be paid for this type of program, contact them immediately because, at times, they do not need to be paid back either! Lastly, always protect your credit by making all payments on time and never miss an opportunity for deferment if you cannot make the payment in full before what was due each month.

Alternative options if you don’t qualify for student loan deferment.

If you cannot qualify for student loan deferment, the next best option is an income-driven repayment plan where your payment amount varies based on how much you earn versus what your outstanding balance was at one point. This helps borrowers stay afloat even when they are struggling to meet their total payments, whereas simply putting it off will not do this automatically.

Another option would be to let your loans go into default. This is not an advisable choice because you will have a mark on your credit that could take years to get removed. Still, suppose you do decide this route. In that case, we can help remove the negative items from your report and even assist with consolidating or rehabilitating your loans, so they are in better condition than when they went into default. Just reach out, and we’ll make sure everything works out for you!

In conclusion

Suppose you are looking for an opportunity to put your payments off until later then. Student loan deferments are usually the best way to do this. However, other options can be explored as well depending on what type of aid or repayment program is right for you, so always reach out and speak with your loan servicer or someone from your school’s financial aid office for assistance; they should be able to help you make the right choice.

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