How To Put Student Loans Into Deferment

Last Updated on August 25, 2023

One of the best ways to manage your student loan payments is by putting them in deferment. This can help you avoid defaulting on your loan, which will result in a lengthy collection process and an even bigger loan balance.

If you’re having trouble keeping up with your student loans or are just looking for a way to lower the amount of interest you owe, deferment may be the solution for you.

In this article, we’ll cover what deferment is, how it works, and how to apply for it.

How To Put Student Loans Into Deferment

What Is In-School Deferment?

Learn how in-school deferment works and how to obtain it to complete your education without financial worries.

Definition and Example of In-School Deferment

In-school deferment is a temporary postponement of repayment of federal student loans that students can obtain while enrolled in college, and in some cases, for six additional months after they cease to be enrolled. It allows you to ease your financial burden while you’re in school and to focus on your education.

For example, if you have graduated from a bachelor’s degree program but are taking classes half-time for a master’s degree, you can get an in-school deferment.

How In-School Deferment Works

It’s tough to cover your expenses, much less pay down debt, when you’re a student. Studying, attending class, and completing your coursework leave little time for earning an income. If you have existing student debt and attend school, in-school deferment can give you the breathing room you need to continue your education without having to make your monthly loan payments.

For example, suppose that Mike took out a Perkins Loan and enrolled at least half-time at an eligible college. His school places his loan into deferment automatically, owing to his enrollment status and school. As such, his loan payments are on pause starting from the date he began to meet the deferment-eligibility criteria and ending on the later of the date when he no longer meets the criteria, or, if requested, for an additional six months after he graduates, withdraws or falls below half-time status. During the deferment, he’s not required to make payments on his loan principal, nor will he have to pay interest on his loan because of his loan type.12

Unpaid interest is only capitalized on Direct Loans and FFEL loans, never on Perkins Loans. Perkins Loans were discontinued in 2018, but some students are still paying them off.

Students generally aren’t responsible for paying interest that accrues on Direct Subsidized Loans, Perkins Loans, or the subsidized part of Direct Consolidation Loans and FFEL Consolidation Loans. They are, however, responsible for paying interest on Direct Unsubsidized Loans, Direct PLUS Loans, FFEL Plus Loans, and the unsubsidized part of Direct Consolidation and FFEL Consolidation Loans.2

If you’re on the hook for paying interest on your loans during deferment, you can pay the interest as it accrues or let it accrue and be capitalized or added to your loan principal at the end of the deferment. Keep in mind that if you let the interest accrue, the total you’ll pay in interest over the life of your loan may be higher. If you want to pay the interest, while completing your in-school deferment form, look for the option that says: “If checked, to make interest payments on my loans during my deferment.”

Requirements for In-School Deferment

To take advantage of an in-school deferment, you must:

  • Have an eligible student loan: Federal Direct Subsidized, Unsubsidized, and PLUS Loans; Federal Family Education Loans (FFEL); and Perkins Loans are generally eligible.1 Some private student loans also allow deferment, though lenders might use different criteria and typically only allow deferment for up to one year.3
  • Be enrolled at least half-time in an eligible college or career school as an undergraduate, graduate, or professional student: An eligible school is one that the U.S. Department of Education has approved to participate in Federal Student Aid programs, even if it doesn’t actually participate in them.

How to Get In-School Deferment

If you’re enrolled at least half-time in an eligible school and have federal student loans, you will most likely be placed in deferment automatically. But your loan servicer—the company that sends loan statements to you, even if you’ve borrowed federal student loans—should still notify you that the deferment has been granted.2

If you’re eligible for an in-school deferment but haven’t heard from your servicer, contact your school so it can reach out to the servicer with your enrollment information and establish your eligibility. Alternatively, request an in-school deferment from your servicer by following the steps below:

  • Complete forms: Download the In-school Deferment Request Form from the federal government’s student financial aid website, fill it out, and then send it to your loan servicer. You may also find the forms on your loan servicer’s website.
  • Verify enrollment: Your loan servicer will verify that you are enrolled at least half-time. This can happen electronically, but in some cases, you’ll need an official at your school to sign off on your request. If so, visit your student aid office to get verification.
  • Wait for approval: Keep making the payments on your loan until you get confirmation from your loan servicer that your request was approved. If you miss payments before your deferment becomes active, you could become delinquent on your loan, risking default, and your credit scores can suffer, too.

Parents who took out Direct PLUS Loans for a child who meets the above eligibility criteria may be eligible for another type of deferment known as a “Parent PLUS borrower deferment.”2 Interested parents should fill out and send in a separate form: the Parent PLUS Borrower Deferment Request. If you’re a parent borrower of a Direct PLUS Loan that was disbursed, or paid out, on or after July 1, 2008, you may be eligible for an additional six-month deferment (if you elect it) after the enrollment requirements cease to be met.1

If your request is approved, you can stay in deferral for as long as you continue to meet the requirements, which means enrollment in an approved institution at least half-time. As a Perkins Loan recipient, your loan will also be deferred for six months from the date you stop meeting the requirements; this is known as the “post-deferment grace period.”1 Similarly, graduate or professional students with Direct PLUS Loans disbursed on or after July 1, 2008, may elect to defer loan payments for an additional six months after they stop meeting the requirements.

Generally, borrowers who have not elected (or qualified) to defer payments will be expected to begin repaying the loan as soon as it’s been disbursed.4

Alternatives to In-School Deferment

If your request is denied, contact your loan servicer immediately if you feel you will have a hard time making payments. You might have other options, namely:

  • Forbearance: This option allows you to stop or reduce your required monthly payments if you’re facing financial difficulties, medical expenses, or a change in employment. You’ll still be responsible for paying interest that accrues on your debt during the forbearance period.5
  • Income-driven repayment plans: If you believe you’ll be unable to make payments for an extended period, consider these plans instead. They allow you to make smaller monthly payments—in some cases, no payment—depending on your income and family size.2 You can use the Department of Education’s repayment estimator to assess what your payments might be with one of these plans.

Key Takeaways

  • An in-school deferment is a type of student loan deferment that lets you pause payments on your student loans while you’re still enrolled in school.
  • It pauses your loan payments (and also interest payments, depending on the loan type) from the date you begin to meet the deferment-eligibility criteria until the later of the date when you no longer meet the criteria, or, if eligible, an additional six months after that.
  • Eligible criteria include half-time enrollment in an eligible school and a federal student loan, though some private loans may be eligible for an in-school deferment.
  • Students who meet the criteria will often be placed in deferment automatically, but those who aren’t can complete a form to request a deferment.

how to defer student loans while in grad school

Do You Have to Pay Student Loans in Graduate School?

Student loans usually aren’t due during graduate school, but paying them can decrease the amount you owe.Ryan LaneJul 12, 2021

GettyImages-1220235293.jpg-pay-student-loans-graduate-school

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Dive deeper into attending grad school

  • Strategies to affording graduate school: How to pay for grad school
  • Who qualifies for aid: Financial aid for grad school
  • Paying for grad school: Subsidized loans for graduate school
  • Find a loan: Best graduate student loan options

You typically don’t have to pay student loans in graduate school. You can defer payments on federal loans and most private student loans if you’re enrolled at least half-time.

But interest will accrue on all graduate school loans and any unsubsidized undergraduate loans during a deferment, increasing the amount you owe. If you can afford to make payments, you’ll likely save money in the long run.

Are student loans deferred if you go to grad school?

All federal student loan payments — including parent PLUS loans taken out on your behalf — can be deferred if you go to graduate school at least half-time. You can also defer federal loans during an eligible full-time graduate fellowship.

Universities have their own definitions for half-time enrollment. Check with your school’s financial aid office if you’re unsure of your status. For example, if you’re working your way through graduate school and taking only one course, payments will likely still be due.

For private student loans, most lenders also let you defer graduate loans if you’re enrolled at least half-time. But you may need to meet additional criteria to not pay existing undergraduate loans.

For example, Advantage Education Loans requires you to start graduate school during your grace period to defer undergraduate loans. For Sallie Mae, if you want to fully defer undergraduate payments, you would have needed to select that option when you took out that loan.

There are also many students who join the workforce, then return to graduate school. If you refinanced student loans while working, you may need to make payments during school.

Some refinance lenders offer in-school deferment, including SoFi, Earnest and CommonBond. But many others, such as College Ave, ELFI and Laurel Road, don’t offer this option.

Check with your lender for its policy. If an in-school deferment isn’t available and you know grad school is in your future, you may want to consider refinancing again before enrolling.

How to defer loans while in grad school

You can do the following to defer loans while in grad school:

  • Wait for your school. Your school will report your enrollment status to the government. If you’re eligible for an in-school deferment, you should automatically receive it for your undergraduate and graduate federal loans.
  • Apply with federal loan servicers. If you want a graduate fellowship deferment, submit the application to your federal loan servicer. If you don’t receive an in-school deferment — and believe you should have — you can also apply directly for one, but check with your school first.
  • Contact private lenders. You will need to request an academic deferment if you have private student loans. Ask your lender or private loan servicer about its process.
  • Opt for forbearance. If deferment isn’t available, you could postpone payments with forbearance. All loans accrue interest during forbearance. Private lenders also limit this option, often to 12 months. Use this benefit only if necessary; you may want to hang onto private loan forbearance in case you lose your job or face a different hardship.

Should you pay student loans during graduate school?

Depending on how much you get paid as a graduate student, money may be tight. But if you can afford to make full or interest-only payments during graduate school, you should.

There are no subsidized loans for graduate school, and grad students take out an average of $18,470 annually in federal loans, according to the most recent data from the College Board.

If you borrowed that much each year for a three-year graduate program, your loans would accrue more than $7,300 in interest by the end of your grace period. By letting that amount capitalize, or get added to your balance, the total you’d repay over 10 years would increase by almost $9,600.

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