If you’re thinking about attending graduate or professional school, you may be wondering how to handle your undergraduate student loans. One question many potential grad students have is, if I go to graduate school, will my loans be deferred?
You could defer loans while in grad school for temporary relief, but other options like loan refinancing or an income-driven repayment plan could bring longer-term help.
Read on to learn more about how to defer student loans while in grad school, and other measures to consider.
Key Points
• Federal student loans are automatically deferred for up to 36 months if you’re enrolled in graduate school at least half-time. Other circumstances that may qualify for deferment include economic hardship, cancer treatment, and unemployment.
• Interest does not accrue on subsidized federal loans during deferment, but it does accrue on unsubsidized and Direct PLUS loans.
• To apply for federal loan deferment, submit a request to the student loan servicer with required documentation.
• An alternative option to deferment for federal loans is Income-Driven Repayment plans, which offer lower monthly payments based on discretionary income and family size over an extended repayment period.
• Private student loans may or may not offer deferment, and terms and conditions vary by lender.
Deferment vs Forbearance
Graduation from undergrad or graduate school is followed by a payment grace period of six months for most federal student loans. But if you hit a snag at some point and can’t afford payments, both deferment and forbearance are designed to allow you to apply to postpone payments.
The main difference between deferment and forbearance: Interest accrues on only some federal student loans during deferment, whereas it accrues on nearly all of them in forbearance.
In forbearance, any unpaid interest is capitalized, or added to your loan balance, at the end of the payment pause, increasing the total amount you end up repaying.
To answer the question of, if I go to graduate school, will my loans be deferred?, it is possible to do, as long as you qualify for deferment.
Deferment, for up to 12 months at a time, for a maximum of 36 months, may be a better choice than forbearance if:
• You have subsidized federal student loans and
• You’re dealing with substantial financial hardship
If you apply to defer student loans while in grad school and don’t qualify, and your financial hardship is temporary, forbearance is an option.
If you have private student loans, many lenders will allow you to apply for a payment pause during hardship, too, though the terms and fees may be less borrower-friendly than is the case with federal student loans.
Do I Qualify to Defer My Payments?
Here’s how to defer student loans while in grad school: For federal student loans, you’ll need to submit a request to your student loan servicer, usually with documentation to show that you meet the eligibility requirements for the deferment. For private student loans, you’ll need to check the rules directly with the lender.
Besides in-school deferment, an automatic deferment that you are eligible for if you’re enrolled in school at least half time, a variety of circumstances may qualify you for federal student loan deferment. These are several of them.
Economic Hardship Deferment
You:
• Are receiving a means-tested benefit, like welfare
• Work full-time but have earnings that are below 150% of the poverty guideline for your family size and state
• Are serving in the Peace Corps
Unemployment Deferment
You receive unemployment benefits or you are unable to find full-time employment.
Graduate Fellowship Deferment
You’re enrolled in an approved graduate fellowship program that provides financial support while you pursue graduate studies and research.
Military Service and Post-Active Duty Student Deferment
You are on active duty military service in connection with a war, military operation, or national emergency; or you’ve completed active duty service and any grace period.
Rehabilitation Training Deferment
You’re enrolled in an approved program that provides mental health, drug abuse, alcohol abuse, or vocational rehab.
Cancer Treatment Deferment
You may qualify for deferment while undergoing cancer treatment and for six months afterward.
When Interest Accrues in Deferment
If you’re looking into defer student loans while in grad school, you’ll want to check how interest would be handled on the loans during the payment pause. And if unpaid interest is capitalized, you’ll need to make sure you’re prepared to take on a higher overall cost of the loan.
During deferment, you are generally not responsible for paying interest on:
• Federal Direct Subsidized Loans
• Federal Perkins Loans
• The subsidized portion of Federal Direct Consolidation Loans
• The subsidized portion of Federal Family Education Loan (FFEL) Program Consolidation Loans
With deferment, you are generally responsible for paying interest on:
• Federal Direct Unsubsidized Loans
• Federal Direct PLUS Loans
• FFEL PLUS Loans
• The unsubsidized portion of Federal Direct Consolidation Loans
• The unsubsidized portion of FFEL Consolidation Loans
• Private student loans (if the lender allows deferment)
If you’re starting graduate or professional school or are in the thick of it, your federal borrowing options are Direct PLUS Loans (commonly called Grad PLUS Loans when borrowers are graduate students) and Direct Unsubsidized Loans (also available to undergrads).
As noted above, those loan types accrue interest during a deferment.
Direct loans for graduate students carry a 9.08% rate for loans disbursed after July 1, 2024 and before July 1, 2025 (the rates are set by federal law for each academic year), with a loan fee of 4.228%.
Private lenders such as banks, credit unions, and online lenders may offer private graduate student loans, sometimes with a fixed or variable rate and no loan fee.
Something to consider: If you pursue deferment on loans that you’re responsible for paying interest on during the deferment period, it’s a good idea to at least consider making interest-only payments during the deferment to manage costs while in grad school.
Options to Deferment in Grad School
There are at least two other ways, beyond forbearance, to get a handle on student loan payments in grad school.
Income-Driven Repayment
Some graduate students who have federal student loans might want to consider switching, even temporarily, to an income-driven repayment (IDR) plan.
Your monthly payment would be tied to family size and discretionary income, which may be low for a graduate student enrolled full time.
The three income-driven repayment plans currently in effect (as of late March 2025) stretch your payments over 20 or 25 years. On one of the plans, the Income-Based Repayment Plan, any remaining balance is typically forgiven after that time. (Forgiveness has been paused on the other IDR plans.) After graduation, you could switch the student loan repayment plan back to the standard 10-year plan if you wanted to.
Though borrowers often pay less each month using one of these plans, they’ll generally pay more in total interest over the duration of the drawn-out loan.
Refinancing
Another way to potentially lower your monthly payments without deferring your loans is to refinance your student loans. Note: You may pay more interest over the life of the loan if you refinance with an extended term.
With student loan refinancing, a private lender pays off your loans with one new loan, ideally with a lower interest rate.
A decrease in an interest rate while maintaining the loan’s term is a way to save money each month and over the life of the loan. To understand how a change of even 1% can affect how much interest you’ll pay on a loan over time, you can use this student loan refinance calculator.
One thing to consider regarding federal loans: Should you refinance these loans, you’ll lose access to federal programs such as income-driven repayment and loan forgiveness. Be sure to consider this carefully before refinancing.
Private lenders may or may not have a deferment option.
Lenders that offer student loan refinancing typically require a good credit history and a steady income, among other factors. A student loan refinancing guide can help you learn more about the process.
The Takeaway
Student loan deferment before or during grad school could bring temporary relief from monthly loan payments. However, it could also add unpaid interest to loans and create a bigger balance to pay off. Those looking to manage payments long term may want to look into alternatives such as income-driven repayment plans and student loan refinancing.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
What does grad school deferment mean?
If you’re attending graduate school at least half-time, in most cases, your federal student loans will automatically be put in deferment. That means your payments will be postponed for 12 months at a time up to 36 months. If you have subsidized federal student loans, you are generally not responsible for paying interest on the loans while in deferment. You typically are responsible for paying interest on unsubsidized and Direct PLUS loans, including Grad PLUS loans.
How does student loan deferment work?
Student loan deferment allows you to temporarily pause your federal loan payments for 12 months at a time up to a maximum of 36 months. You may be eligible for deferment if you are facing such circumstances as unemployment, financial hardship, cancer treatment, or if you’re in an approved graduate fellowship program. Also, if you are enrolled in school at least half-time, your loans are automatically placed in deferment.
Depending on the type of federal loans you have, such as subsidized federal loans, you may not be responsible for paying the interest on them during deferment.
What are the disadvantages of deferring student loans?
The main disadvantage of deferment is that interest may accrue on your student loans while they are in deferment. That means your loan balance will increase and you will pay more over the life of the loan. You are generally responsible for paying the interest on federal unsubsidized loans and Direct PLUS loans, among others, while in deferment.
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