Student Loan Deferment - Everything You Need to Know

Student loan deferment – everything you need to know

/ 09:14 AM October 27, 2021

It’s more important than ever to find out about student loans. The coronavirus pandemic was not only a public health crisis but a personal finance problem as well. Many people lost their sources of income, so they found it harder to pay back their debts. Specifically, student loan borrowers couldn’t meet the monthly payments anymore.

Fortunately, people have many ways to make debt repayment easier. Student loan deferment is one of the options that the US government extended in light of the COVID pandemic. It lets you avoid submitting payments on your loan, so you can find a new job or reopen your business. In turn, you will eventually be able to repay your student loan.


We will talk more about student loan deferment, so you can see if it’s a good idea. Then, we’ll explore details regarding the program, especially the types available. You’ll see that your options are different if you have a private or federal student loan. What’s more, we’ll show you other ways of repaying your student loans.

How does student loan deferment work?

These are dollar bills, a credit card, and a hand.

The Federal Student Aid website announced the final extension of COVID-19 student loan relief until the 31st of January, 2022. Here’s what is in store for qualified loans:

  • Pause on student loan payments
  • 0% interest rate
  • Suspended collection for defaulted loans

In other words, you won’t have to pay your student loans every month. Still, they will build up interest during the deferment period. You may do two things during that time.

  1. Wait until the deadline – You could let your loan pile up interest. However, the program will capitalize your accrued interest, meaning it will add that amount to your total loan balance. Once repayment restarts, the loan will base your interest on this larger amount. As a result, you will have to pay more interest every month.
  2. Pay interest every month – On the other hand, you could pay the interest every month. This could prevent you from building up more unpaid interest, keeping your interest payments from rising.

These apply if you have a federal student loan. If you have a private loan, you will have to speak with your student loan servicer to find out if you can defer yours.

Is student loan deferment a good idea?

These are dollar bills.


Before you check the student loan servicing terms, you must be sure about this decision. After all, it involves a huge amount that you must repay no matter what!

Determine why you need student loan deferment and write it down. Here are the two major reasons why most people look for this option:

  • Sudden money problem – If you lost your means of making money recently, this fits you. It’s also a good idea to defer student loans if you’re sick.
  • Active duty – People serving in the military or the Peace Corps have exclusive options for student loan deferment.

Moreover, you should consider the risks of this decision. If you’re not careful, your money problems could worsen. Keep these in mind before applying:


  • Short-term solution – Student loan deferment only lasts for a short time, so you can’t use this to avoid repaying.
  • Be in debt longer – You still owe money during deferment, and you’ll only start repaying after that ends. This means you’re spending more time in debt, and you’ll take even longer if you don’t pay interest every month.
  • Loan default – Let’s say you still couldn’t repay the loan even after this. Eventually, your loan may default, causing a lot of problems. For example, a part of your salary may go to your loan holder.
  • Get bad credit – This is one of the biggest problems you could get if you keep on delaying your student loans. Late payments will lower your credit rating. A bad credit score could give you more problems.

Who qualifies for a student loan deferment?

This is a person researching student loan deferment.

Your relief options will depend on your current situation. The following are the types of student loan deferment you may get if you have a federal student loan:

  • Economic Hardship Deferment – You may get this if you’re receiving welfare or working in the Peace Corps. This is also a choice for those earning less than 150% of the poverty guidelines. Though, this only lasts for three years.
  • Cancer Treatment – Like its namesake, you may get this if you’re dealing with cancer. You may put off paying your loan during the treatment and six months after it ends.
  • Unemployment – You may qualify if you receive unemployment benefits, or you’re having trouble finding a job.
  • Parent PLUS Borrower – if you used the Direct PLUS Loan program to pay for your kid’s education, you may get this plan.

You’ll have to contact your loan holder if you have private student loans. See if it will let you delay your loan payments and learn how you may qualify.

Read More: Biden’s Plan For Student Loans

Other ways to pay student loans

These are two people talking.

Student loan deferment isn’t the only way you could pay easier. If this doesn’t work for you, perhaps the following could help your deal with your student debt faster:

  • Change repayment plan – You could turn your current plan into an income-driven repayment (IDR) plan. This will limit the monthly payments from 10% to 20% of your discretionary income. Even better, you might not even have to pay every month depending on your family size.
  • Consolidated loan – You may lump all your student loans into one that has a lower interest rate. This is called debt consolidation, and it could reduce your payments every month. In turn, you may find it easier to pay.
  • Student loan forgiveness – The Department of Education will overhaul this program, removing the debt of 22,000 borrowers. You might want to check if you’re part of the select few. If not, check their website if you qualify.

You may also try to get rid of student debt yourself. Follow the snowball method or the avalanche method to make repayment easier.

The former involves paying the smaller balances first. This is best if you can’t stick to a repayment plan. Completing smaller amounts could encourage you to keep going.

On the other hand, you may try the latter by paying the larger amounts first. This is faster than the snowball, but you’ll take longer to see results.

Final thoughts

You’ve now learned the gist of student loan deferment. Still, you should read more about this program because we cannot include every detail about it.

Again, plan your debt repayment before using any method. This makes sure you don’t waste time and money. You may try the other options we laid out.

You may check the other Inquirer USA articles to learn more about loans and how to repay them. What’s more, they talk about other trending topics.

If you are interested in content marketing, please email [email protected]

Subscribe to our newsletters! Get updates right into your inbox

Don't miss out on the latest news and information.
TAGS: interesting topics, Student Loan, student loan payment, USFINANCE
For feedback, complaints, or inquiries, contact us.

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.