Can you defer student loan payments

Having student loan debt increases your debt-to-income ratio and may make it more difficult to get approved for other types of loans, such as a mortgage or car loan, in the future. If your student loans accrue interest during deferment that you have to pay, it could add significantly to the total amount you owe—especially if the interest is capitalized. Student loan deferment and forbearance can be useful options when you have a temporary setback that makes it hard to make your payments, such as losing your job.

Missing a student loan payment has consequences, including potential damage to your credit score, and deferment can help you avoid them. However, you're essentially "kicking the can down the road," and will eventually have to make payments again—potentially larger ones if unpaid interest accrues during the deferment. Deferment can be a solution for temporary financial issues that make it difficult to pay your student loans.

If you have federal student loans and your financial issues are longer-lasting—for example, you've entered a low-paying career field—an income-based repayment IBR plan may be a better alternative. IBR is one of four income-driven repayment plans the federal government offers for borrowers whose federal student loan payments are high relative to their incomes.

An IBR plan permanently reduces your monthly payments, gives you 20 to 25 years to repay your loan, and may even forgive the loan if it's not paid off in that time.

Income-based repayment works like this: If you have federal student loans for undergraduate studies, PLUS loans for graduate education or consolidated federal loans that don't include a parent PLUS loan, complete the online application through the Department of Education or contact your loan servicer.

Once you're approved, your new monthly payment will be calculated based on your income and family size. To maintain your eligibility for the IBR plan, you must "recertify" your income information each year; if your income changes, your loan payment amount may change too. However, your payment will never be higher than it would have been under a standard year student loan repayment plan.

The downside of IBR is that you'll be in debt for much longer than you would have been under a year student loan repayment plan. Carrying this debt can make it harder to qualify for other loans, and if you miss a payment, it can negatively affect your credit. The upside, though, is that if you still haven't paid off your loan after 20 or 25 years of making your payments on time, you'll be eligible for student loan forgiveness, which cancels out any remaining balance.

If you're struggling to make your student loan payments because of short-term financial problems, student loan deferment can offer an opportunity to get your finances in order and help you maintain a good credit score. Depending on the type of loan you have and your situation, you may also want to consider student loan forbearance or income based repayment.

Before applying for a student loan deferment, make sure you know whether you'll be responsible for paying any interest that accrues during deferment and how deferment will affect your overall loan balance. Talking to your student loan servicer will help you understand the options available so you can make an educated decision.

The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach.

If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well. Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it. Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.

To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested.

Additionally, you may obtain a free copy of your report once a week through April at AnnualCreditReport. Editorial Policy: The information contained in Ask Experian is for educational purposes only and is not legal advice. You should consult your own attorney or seek specific advice from a legal professional regarding any legal issues. If you know you're going to need help, it's best to seek out a deferment or forbearance before you miss any payments.

To qualify for a deferment, you must meet certain requirements; however, once you meet the requirements, you can't be turned down. A forbearance may be a good option if you're not eligible to postpone your payments using a deferment. But, a forbearance isn't automatically granted, rather it's typically approved at your lender's or servicer's discretion. If you receive one, understand that the time limit may be set by your lender or servicer, or by the regulations.

A good practice is to use as little forbearance as possible, in case you need to request additional forbearance in the future. During a deferment you aren't required to make payments, but you're responsible for any interest that accrues on all loan types except subsidized Stafford and subsidized consolidation loans.

When your deferment ends, any unpaid interest is added to the amount you borrowed—this is called capitalization. Your increased loan amount then generates more interest, adding to the overall cost of your loan. You can limit the amount to be capitalized by making interest payments during deferment.

During the forbearance period, you're responsible for any interest that accrues, regardless of the loan type. When your forbearance ends, unpaid, accrued interest may be added to the amount you borrowed—this is called capitalization. You can limit the amount to be capitalized by making interest payments during forbearance. Remember, deferment and forbearance are temporary. Afterwards, you'll need to begin making payments again. It's important you select a new repayment plan before your deferment or forbearance ends, so you can make on-time payments.

If you have cancer, you can request deferment of your student loan debt during treatment and for six months following the conclusion of treatment. If you don't qualify for one of the types of deferment just listed, you still may qualify for one of the following:. The American Rescue Plan , passed by Congress and signed by President Biden in March , includes a provision that student loan forgiveness issued between Jan.

The way interest on student loans is calculated is slightly different from how it's calculated on most other loans. With student loans, interest accrues daily but is not compounded added to the balance. Instead, your monthly payment includes the interest for that month and a portion of the principal. As you make payments on your loan, the balance goes down, as does the daily interest amount. But when your loan is in deferment, the daily interest amount remains the same until you begin repaying the loan since the interest is not capitalized added to the loan until the end of the deferment period.

If you have private or unsubsidized federal student loans, deferment can be costly. That increases the amount you owe once you begin repayment, as well as the total you will pay over the life of the loan. The table below shows the amounts you would pay based on four different scenarios: 1 paid as agreed; 2 subsidized with 36 months of interest-free deferment; 3 unsubsidized with a month deferment but paying interest during deferment; 4 unsubsidized with a month deferment and paying no interest during deferment.

Depending on your circumstances, two alternatives to student loan deferment might be worth considering:. The main difference between deferment and forbearance is that interest always accrues with forbearance and is added to your loan at the end of the deferment period unless you pay it as it accrues. Scenarios 3 and 4 above illustrate what happens to any loan in forbearance.

If you expect your financial problems to last more than three years, an income-driven repayment IDR plan may be best for you. IDR plans determine your monthly payments based on your income and family size. IDRs do extend the time you will be paying on your loan, so your total interest payments over time will likely be more than with deferment.

One big caveat: IDRs are only available to pay off federal student loans. This is an important reason you should avoid mixing federal and private loans into a single consolidated loan. Doing so will remove IDR eligibility from the federal loan portion of your combined debt. Student loan deferment makes the most sense if you have subsidized federal or Perkins loans since interest does not accrue on them. Remember that deferment and forbearance are for short-term financial difficulty.

Income-driven repayment IDR is a better option if your financial problems will last more than three years and you are repaying federal student loan debt. In all cases, make sure you contact your loan servicer immediately if you have trouble making your student loan payments. Federal Student Aid. Student Loans. Your Privacy Rights.

To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.

These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. What You Need to Know. Ways to Pay Off Loans. Loan Forgiveness. Loans Out of Control? Loan Basics Student Loans. Table of Contents Expand.