Deferment is a way you can postpone when you have to make a payment on your student loans. It works as long as the lender of your loan is willing to grant you such a postponement, and is typically a more prevalent option for federal student loan debt.
This is because federal education loans inherently come with a wealth of deferment time built-in, and even come with an automatic six-month deferment that automatically goes into effect once you have graduated, or have fallen below half-time status.
You can still get a deferment for your private student loan debt though, and it will depend on your specific lender’s willingness to grant you such a benefit when the time comes to make your request. Some private student loans are similar to federal student loans in that they inherently come with a variety of deferments that you can utilize when you need them once you have begun repayment.
Some however don’t, and it is up to you to determine whether or not your private loan comes with such deferment benefits before you actually request such a postponement, or even apply for the loan.
Deferment Basics
I like to group student loan deferments into three categories:
- In-school deferments
- Grace-period deferments
- Out-of-school deferments
The first category involves only in-school deferments, as these are typically automatically put into effect as long as you are attending class on the terms that were provided from within your promissory note.
The next category involves what I like to refer to as “grace-period” deferments. These deferments are also typically put into effect automatically once you have graduated, or left school for whatever reason. You should only know that you have these two types of deferments available for any of your student loans, as you don’t have to worry about manually putting them into effect under most normal circumstances.
The last category of deferments involves when you must go out of your way to request the actual deferment. These types of deferments therefore do not automatically go into effect, and therefore need to be requested from your lender when the time is right.
Most deferments in this category are provided when you are going through a particular situation that may prevent you from making your normal student loan payment. Common reasons that most lenders accept include unemployment, financial limitations, and health issues, although this list isn’t meant to be comprehensive.
When you are ready to make a deferment request you simply need to contact your lender. Each lender has a different policy when it comes to deferments, and you may be able to accomplish your request online, via phone, or by filling out a written application depending on the lender.
Most student loans will come with a specific amount of deferment time built in, and you may have to speak with your lender in order to find out the actual deferment time you have remaining on your loan. Deferments are most often granted in six-month periods, although it is not uncommon for three-month deferments to be granted. Once you have been granted your deferment you should remember to check back periodically to make sure that you loan hasn’t fallen back into repayment status.
Utilizing Deferments
Deferments are great when you are unable to make a payment on your student loan for whatever reason and don’t mind postponing the time it takes to pay off your loan. While you may be “saving” money in the short-run when you go ahead and utilize deferment time, you are essentially pushing back the term of your loan, which may result in a higher overall loan cost.
Regardless, it is highly recommended that you don’t hesitate to use your deferments if it is a choice between letting your student loans fall into default, and delaying when your loan will be paid off.
Because deferments don’t capitalize the interest that accrues during the actual time your loan is being pushed back, they are not as bad as a forbearance, which do just that. There are still negative repercussions that you must be wary of, but they are typically not that severe, and depend heavily on the actual length of time you delay when you begin making your payments.
You should always check for the amount of deferment time that comes with any student loan you take out, even if it a federal education loan. This can give you the piece of mind to not have to worry if something happens and you have to postpone your payments for whatever reason, and it will simply allow you to plan things better over time.
