What Are Student Loan Deferment and Forbearance Programs?
Student loan deferment is a temporary period during which you don't have to make payments. You won't get charged a penalty for missing a payment and it won't affect your credit.
Federal student loan servicers and many private student loan lenders, including Discover Student Loans, offer the following four types of deferment:
- In-school: when enrolled in an eligible school at least half-time. Deferment will continue between terms as long as the break is less than six months long.
- Active Military Duty: when on active military duty or performing qualifying National Guard duty.
- Public Service: when completing public service for an eligible organization.
- Residency: when enrolled in a health care residency program.
Deferment can last several years depending on the type of loan and reason. It is possible to qualify for more than one type of deferment during the life of your loan. It's important to check with your servicer to see what is available and the requirements. Deferment options for Discover Student Loans can be found here.
Unsubsidized federal student loans and private student loans continue to accrue interest during deferment, and the accrued interest capitalizes - which means it is added to the loan's principal balance - once the deferment ends. You can, however, opt to make payments (including interest-only payments), which keeps your principal balance from growing as much when deferment ends.
Student loan forbearance is another type of temporary reprieve from making student loan payments. Forbearance is often associated with financial hardship or illness and generally doesn't last as long as deferment. In some cases, you can qualify for forbearance if you don't qualify for deferment, and vice versa.
Like deferment, forbearance options vary by loan type and servicer. Both your private and federal student loans will continue to accrue interest during forbearance.
Discover Student Loans grants forbearance in the following circumstances:
- Medical disability
- Excessive student loan burden
- Financial hardship
If approved, your loans can stay in forbearance for a cumulative maximum of 12 months. Like deferment, unsubsidized federal student loans and private student loans continue to accrue interest during forbearance, and the accrued interest capitalizes -which means it is added to the loan' principal balance -once the forbearance ends. If you need additional help, Discover Student Loans has several repayment assistance options, depending on your situation. You can find out more details about forbearance and repayment assistance here.
Applying and Lifetime Caps
Generally, you must apply for deferment or forbearance and each servicer will have different eligibility criteria. It's important to continue making payments until your servicer approves your application. Most servicers will automatically grant in-school deferment with confirmation of at least half-time enrollment from your school, but it's important to follow up to ensure it's been done.
Keep in mind that there could be lifetime limits to deferment and forbearance. If you can resume making payments early, you may be able to end your deferment or forbearance and save the benefits should you need them in the future.
Before applying for deferment or forbearance, there may be less costly alternatives to consider. If possible, you may be able to change your repayment plan. Federal student loans have income-driven plans that can lower your payments based on your income. Discover Student Loans has hardship, reduced payment assistance and payment extension programs that could lower your monthly payment to $50 for up to six months.
If you're having trouble making payments, reach out to your loan servicer as soon as possible to discuss your options. Temporarily reducing or stopping your student loan payments might give you the breathing room you need to get into a financial situation where you can comfortably make payments in the future.