Student loans are one of the burdens that young professionals carry after they finish their degrees. It is one of the reasons why some individuals decide to work abroad, hoping to pay it off faster. However, postponing the payment is a practical solution for those who face financial challenges. This article guides you on how to postpone your student loan payments and provides essential information for you to make informed decisions.
What is Postponement of Student Loan Payment?
Postponement or deferment of student loan payment means delaying or halting the repayment of the loan, depending on the circumstances of the borrower. During the deferment, you are not required to make payments, and interest accrual may be waived depending on the agreement with the lender. It is an excellent option for those who temporarily face financial hardship and cannot pay the loan at the time.
What are the Types of Postponement?
There are different types of postponement options for student loans, and these depend on your specific circumstances. Below are the categories of postponement:
Type |
Description |
|---|---|
Unemployment deferment |
For those who are actively seeking employment. |
Economic hardship deferment |
For those who have unexpected financial challenges, such as job loss or significant medical expenses. |
Graduate fellowship deferment |
For those who are enrolled in a graduate fellowship program. |
Rehabilitation training deferment |
For those who are enrolled in a rehabilitation training program. |
Military deferment |
For those who are on active duty or in military school. |
Parental leave deferment |
For those who take parental leave or have a new-born or adopted child. |
Temporary Total Disability Deferment |
For those who cannot work due to a total and temporary disability. |
How Do I Qualify for Postponement?
Each deferment program has specific criteria for eligibility. You must contact your lender or servicer and inquire which postponement options are available for you. However, below are some qualifications that are generally common in most deferment programs:
- You must be enrolled in an eligible institution or program.
- You must be attending school at least half-time or participating in a graduate fellowship program.
- You have an outstanding balance that is currently in repayment.
- You do not have any previous defaulted loans.
- You cannot have a grant or scholarship that covers your full tuition and fees.
- You must provide documentation to support your eligibility.
What Happens to the Interest During Postponement?
The interest on your student loan may not be waived during the deferment period, depending on the terms of the loan. If it is not waived, it will continue to accrue and add to your principal balance, resulting in a higher overall debt. It is essential to understand these terms before agreeing to postpone your loan payments. It is also possible to make interest-only payments during the deferment period to reduce the interest accumulation.
What Happens After the Deferment Period?
Once the deferment period ends, you will need to resume your monthly payments. Failure to do so may result in defaulting on your loan, which will negatively impact your credit score. You can discuss repayment options with your lender or servicer to find the best option for your situation.
How Do I Apply for Postponement?
To apply for postponement, you must fill out the deferment application form provided by your lender or servicer. You must also submit required documentation to prove your eligibility. Before agreeing to defer your loan, make sure to read and understand the terms and conditions of the deferment agreement.
FAQs
1. Can I still make payments during the deferment period?
Yes, you can still make payments during the deferment period. If you choose to do so, it may reduce the interest accumulation on your loan and help you save money in the long run.
2. How long can I defer my loan payments?
The duration of deferment depends on the specific program and your eligibility. It can range from six months to three years or more, depending on your circumstances.
3. Can I apply for deferment if I am self-employed?
Yes, self-employed individuals may qualify for deferment, provided that they meet the specific program requirements and provide the necessary documentation supporting their eligibility.
4. Can I apply for deferment if my loan is in default?
No. If your loan is already in default, you are not eligible for deferment. You can apply for loan consolidation or rehabilitation to help you repay your outstanding balance.
5. Can I still apply for deferment if I have already started repayment?
Yes. You can apply for deferment even if you have already started repayment on your loan. However, you must meet the specific program requirements and provide the necessary documentation to support your eligibility.
6. Are there fees for applying for deferment?
There are no fees for applying for deferment, provided that you submit the application form and required documentation on time.
7. Will deferment affect my credit score?
Deferment will not negatively affect your credit score. However, failure to repay your loan after the deferment period ends may result in defaulting on your loan, which will impact your credit score negatively.
8. Can I still qualify for deferment if I am in school part-time?
It depends on the specific program requirements. In most cases, you must be enrolled at least half-time to qualify for deferment. You can contact your lender or servicer for more information.
9. Can I apply for deferment if I am enrolled in a certificate program, not a degree-granting college?
It depends on the specific program requirements. Some certificate programs may qualify for deferment if they meet certain criteria. You can contact your lender or servicer for more information.
10. Can I apply for deferment if I am on leave but still employed?
No. To qualify for deferment, you must be facing financial hardship or other circumstances that prevent you from making payments on your loan.
11. Can I apply for deferment if I am enrolled in an online program?
It depends on the specific program requirements. In some cases, online programs may qualify for deferment. You can contact your lender or servicer for more information.
12. Can I apply for deferment for a private student loan?
It depends on the specific terms and conditions of the private student loan. You must contact your lender or servicer to inquire about deferment options.
13. Can I apply for deferment for a Parent PLUS loan?
Yes, Parent PLUS loan borrowers may qualify for deferment if the student for whom the loan was obtained is enrolled in school. The deferment period ends six months after the student graduates or drops below half-time enrollment.
Conclusion
Postponing student loan payments can be a practical solution when you are facing financial challenges. It is essential to understand the deferment options available to you and their specific criteria to qualify. It is also crucial to read and understand the terms and conditions of the deferment agreement before agreeing to postpone your loan payments. Remember, the interest on your loan may still accrue during the deferment period, so it is best to make interest-only payments if possible. At the end of the deferment period, you will need to resume your monthly payments to avoid defaulting on your loan. If you have questions or concerns, contact your lender or servicer for guidance.
Closing Disclaimer
This article is for informational purposes only and should not be considered as legal or financial advice. The deferment programs and their requirements may change depending on the lender or servicer. Always consult with your lender or servicer before making any decisions regarding your student loans. Also, remember that postponing your payments may increase the overall debt and interest accumulation on your loan, so it is best to make informed decisions to avoid financial difficulties in the future.