Defer Your Student Loans

Flexible Student Loan Repayment Benefit

Deferment of loans, whether through the federal loan program or via private lender, allows borrowers a flexible option in repayment. That said, deferment is awarded to candidates that qualify. Deferment is not used as a consolidation tool or as a way to avoid making loan payments. In fact, if your loans are in repayment trouble you could lose your options to defer unless you act quickly.

A number of deferment options may be available to federal loan borrowers as well as private student loan borrowers. Deferment arrangements may be made under certain circumstances and vary between different types of loans as well as lenders. It’s important that you understand the benefits and limitations of loan deferment.

Deferment of Federal Student Loans

Direct Federal student loans are provided through the federal government. The Federal Family Education Loan Program (FFELP) strikes a unique partnership between student loan lenders and the federal government for the purpose of making government loans more widely available. Federal loans under either program eligible for deferment include:

Deferment arrangements may be made in the following circumstances:

Deferment of Private Student Loans

Private or alternative student loans diverge greatly from their federal counterparts. In fact an alternative loan is a personal loan packaged in a student loan wrapper. Repayment terms vary between private lenders, but some general considerations include:

Jumping Through the Hoops

Borrowers must apply for loan deferment consideration, much the same way one would apply for a loan consolidation. Deferment is a financial agreement made between a lender and a borrower. A deferment overrides a previous loan agreement. You and your lender will sign a deferment agreement with a specific begin and end date and any attendant terms.

Multiple loan deferments are possible. You are not limited to one deferment if you qualify for another. Similar terms may be applied.

Avoid Default

Default is unnecessary. When you fail to make your loan payments over a particular length of time—for federal loans the limit is 270 days—your loan(s) enter a stage of Default. At this point almost all options to manage your repayment options are suspended until you make a series of on-time payments. The lesson then is: contact your lender as soon as you know you require a hardship deferment or are going back to school.