What are some alternative repayment options for your student loans?

1 What is student loan deferment?

Student loan deferment is a type of forbearance that lets you stop making payments on your federal or private student loans for a certain period of time, usually up to 12 months at a time. Unlike some other forms of forbearance, deferment does not charge you interest on your loans during the pause, so your balance will not increase. However, you may still have to pay interest on any unpaid interest that accrued before the deferment.

2 How do you qualify for student loan deferment?

To qualify for student loan deferment, you must meet certain criteria depending on the type of loan you have and the reason for your request. For federal student loans, you may be eligible for deferment if you are enrolled at least half-time in an eligible college or career school, in a graduate fellowship program, or an approved rehabilitation program for the disabled. Additionally, you may be eligible if you are unemployed or unable to find full-time work (up to three years), experiencing economic hardship (up to three years), serving on active duty in the military or in the Peace Corps, or in default on a Perkins loan. For private student loans, the eligibility requirements and terms of deferment may vary by lender and loan agreement, so you should contact your lender to find out if you can defer your payments and under what conditions.

4 What are the benefits of student loan deferment?

The main benefit of student loan deferment is that it can give you some relief from your monthly payments when you are facing financial difficulties or pursuing other goals. It can also help you avoid defaulting on your loans, which can have serious consequences for your credit and future borrowing options. Additionally, deferment can preserve your eligibility for other repayment plans or forgiveness programs that may be available to you.

6 What are some alternative repayment options for your student loans?

If you do not qualify for student loan deferment or you prefer to keep making payments on your loans, you may have other options to lower your monthly amount or adjust it to your income. For federal student loans, you may be able to switch to a different repayment plan, such as graduated repayment, which starts with lower payments that increase every two years, extended repayment, which stretches your payments over 25 years instead of 10, or income-driven repayment, which bases your payments on a percentage of your discretionary income and forgives any remaining balance after 20 or 25 years. Private student loans may offer the possibility of negotiating with your lender for a lower interest rate, a longer repayment term, or a temporary reduction or suspension of your payments, depending on your credit history, financial situation, and lender's policies.

7 Here’s what else to consider

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