The average student loan borrower has roughly $37,000 in student debt. Paying that amount over the 10-year federal Standard Repayment Plan can cost you hundreds of dollars a month.
And depending on where you ended up after graduation, you may not be able to afford it. There are also other circumstances that may make repayment difficult, including going back to school, going into active duty, or losing a job.
As such, it’s important to know how to pause student loan payments when you can’t afford them. Depending on who your lender is, though, the options can vary.
Two Ways You Can Pause Student Loan Payments
Depending on your situation and need, you may be able to pause student loan payments through student loan deferment or forbearance. Each of these options has different requirements and outcomes, so it’s essential to understand how they work.
1. Student Loan Deferment
Deferring your student loan payments means that you don’t have to make payments for a set period of time.
In the meantime, the loan will continue to accrue interest . But if you have subsidized federal loans or Perkins Loans, you won’t be responsible for paying it.
If you are responsible for paying the interest that accrues at all times—for example, if you have an unsubsidized loan or a PLUS loan—and don’t make interest-only payments during the deferment, the interest will capitalize at the end of the deferment period.
This means that you’ll have a new, higher balance that includes the principal amount at the beginning of the deferment period plus the unpaid interest that accrued during deferment.
2. Student Loan Forbearance?
Another potential option is putting loans in forbearance . Like deferment, forbearance allows qualified applicants to delay payments for a set period of time.
The primary difference is that you’re responsible for paying any interest that accrues during the forbearance period, regardless of which type of loan you have.
Again, it is possible to make interest-only payments during the forbearance period. If none are made, the interest will capitalize, and the loan balance will be higher when the forbearance period is over.
While these general definitions apply to both federal and private student loans, some details differ between the two.
Federal Student Loans
The U.S. Department Education offers both deferment and forbearance on all of its student loans. Keep in mind that neither comes automatically ; both need to be applied for through your student loan servicer. Here’s what you need to know about both options.
Qualifying for Federal Loan Deferment
If you have federal loans, you may be able to defer your student loan payments for up to three years. Here’s how to know if you may be eligible:
• You have any federal student loan, subsidized or unsubsidized.
• You’re enrolled at least half-time at an eligible school, and you received a Direct PLUS Loan or FFEL PLUS Loan as a graduate or professional student. In this case, your loans will be deferred while you’re in school at least half-time plus six months after you leave.
• You’re a parent who took out a Direct PLUS Loan or FFEL PLUS Loan on behalf of your child student, and they’re enrolled at least half-time at an eligible school. In this case, your loans will be deferred while your child remains in school plus six months after they leave.
• You’re enrolled in an approved graduate fellowship program.
• You’re enrolled in an approved rehabilitation training program for the disabled.
• You’re unemployed and unable to find employment.
• You’re experiencing economic hardship.
• You’re serving in the Peace Corps.
• You’re on active duty military service in connection with a war, military operation or national emergency. In this case, your loans will be deferred while you’re on active duty plus 13 months afterward.
You can read more about eligibility here .
Qualifying for Federal Loan Forbearance
The federal government has two types of forbearance: general and mandatory . Both can last for up to 12 months at a time. But if you still qualify once that period is up, you can request for a renewal.
General forbearance is also sometimes called discretionary forbearance because your loan servicer gets to choose whether or not to approve your request.
You can request general forbearance if you’re unable to make your monthly payments due to:
• Financial difficulties
• Medical expenses
• Change in employment
• Other reasons your loan servicer will accept
Mandatory forbearance is not at the discretion of your loan servicer, and can be granted if you meet any of the following requirements:
• You’re serving in a medical or dental internship or residency program and meet specific requirements.
• The total amount you owe on all of your loans is 20% or more of your gross monthly income.
• You’re serving in an AmeriCorps position for which you’ve received a national service award.
• You’re a teacher and qualify for teacher loan forgiveness.
• You qualify for partial payments on your loans through the U.S. Department of Defense Student Loan Repayment Program.
• You’re a member of the National Guard and have been activated by a governor, but don’t qualify for the military deferment.
You can read more details about eligibility requirements for forbearance here .
Private Student Loans
While the options and requirements for these programs are clear on federal student loans, they can be a little trickier with private loans.
That’s because there are so many different private student lenders , and each has its own policy and criteria for determining eligibility.
Unfortunately, there’s no mandatory forbearance option like there is with federal loans. Instead, it’s typically at the lender’s discretion to determine whether you qualify.
Also, the deferment and forbearance periods can vary by lender. For example, you may need to apply every few months, and you may be limited on how often you can apply.
Since there’s no real consistency among private student lenders, if you borrowed a private loan it’s important to check with your lender directly to find out what their policy is.
How Deferment and Forbearance Can Affect You
When you request a deferment or forbearance on your federal loans, it will be noted on your credit report . However, neither option will have a negative impact on your credit score.
That said, if you miss a payment while you’re waiting for your deferment or forbearance request to get approved, it may hurt your credit. At 90 days overdue , your lender can report the missed payment(s) to the credit bureaus.
Because of this, it may be wise to continue making payments as usual until you receive the official approval for your deferment or forbearance with an effective date.
Also, since interest accrued during a deferment or forbearance can capitalize at the end of the period, you could end up with a higher balance and monthly payment than when you started. (Though, P.S., interest doesn’t capitalize on all loan types! Interest on Perkins Loans does not capitalize on the principal, for example.)
If you originally wanted to pause student loan payments because you couldn’t afford them, a higher payment could make things more difficult. Take interest into account while considering these options.
What if You Don’t Qualify to Pause Student Loan Payments?
Depending on your lender and situation, you may not be eligible for deferment or forbearance. If this happens, there are a couple of options to consider.
Income-Driven Repayment Plans
If you have federal student loans, it may be possible to reduce your monthly payment by getting on an income-driven repayment plan.
If you qualify, you can decrease your monthly payment to a percentage of your discretionary income. It won’t stop your loan payments altogether, but it can help make them more affordable.
Refinancing Your Student Loans
Whether you have federal or private loans, you can opt to refinance your student loans with a lender that offers the deferment or forbearance policies that you need. And depending on your current payment and interest rate, refinancing could help you save money by reducing one or both.
SoFi offers Unemployment Protection for its members. If you lose your job through no fault of your own, you could qualify for loan forbearance for up to 12 months in three-month increments. What’s more, SoFi’s Career Coaching team can help you find a new job.
Keep in mind that refinancing federal loans with a private lender will cause you to lose certain benefits, including income-driven repayment options and access to federal loan forgiveness programs.
Determine If Pausing Student Loan Payments Is Right for You
As you’re considering your options and whether you qualify, take a step back and think about whether deferment or forbearance are right for you in the long run.
And if you find that your current lender’s options aren’t enough, consider refinancing your student loans with a lender that provides what you need.
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SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.
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Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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