Making student loan payments can sometimes be financially challenging. You might not know what to do if you're having trouble finding work, are still in school, or recently had a financial setback.
If you can’t afford your student loan payments, it’s important you talk to your servicer as soon as possible—before you make a late payment or miss a payment—to discuss your financial situation and see what options you have.
Making late payments or missing payments has consequences that can be harmful to your credit and cost money. Student loan servicers may report a late or missed payment to the credit agencies, which may negatively affect your credit score and potentially impact your ability to borrow money in the future. While Discover® Student Loans doesn't charge any fees, many servicers do, including instances where late payments are made. These fees can add up and contribute to your overall costs.
If you are experiencing financial challenges and have exhausted other options first, talk to your servicer about placing your loans in deferment or forbearance. This gives you temporary relief by allowing you to postpone your monthly payments, but can result in higher monthly payments when your loans come out of deferment or forbearance.
Student loan deferment is a temporary period during which you don't have to make payments. 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 and Fellowship: when enrolled in a health care residency or fellowship 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. If you have student loans with Discover, learn more about the types of deferment we offer and the eligibility requirements, including how to apply.
Even though your payments will temporarily be paused, interest still accrues on your loans. For unsubsidized federal student loans and private student loans, this accrued interest capitalizes—which means it is added to the loan's principal balance—once the deferment ends. This may increase the principal balance of your loan, the amount of your monthly payment, and the total cost of your loan. You can, however, opt to make payments, which keeps your principal balance from growing when deferment ends.
Student loan forbearance is another type of temporary relief 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 federal and private student loans will continue to accrue interest during forbearance, and you will be responsible for the interest.
Discover Student Loans grants forbearance in the following circumstances:
- Medical disability
- Excessive student loan burden
- Financial hardship
If approved, your student loans from Discover can stay in forbearance for a cumulative maximum of 12 months for the life of each individual loan. Like deferment, interest continues to accrue during forbearance and will capitalize (be added to the loan's principal balance) once the term ends. This may increase the principal balance of your loan, the amount of your monthly payment, and the total cost of your loan. To help lower your overall loan cost, you have the option to make payments to help offset the accruing interest.
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. You are responsible for ensuring your loan status and enrollment/deferment information is up to date with your servicer.
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, as well as graduated and extended repayment plans. 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 for eligible borrowers.
Student loan consolidation for your federal student loans or refinancing your student loans from Discover or other private loans may also be an option to help you manage your debt and lower your monthly payment. Remember that if you extend the time it takes to pay off your student loans in exchange for a lower monthly payment, you could end up paying more in interest in the long run. You may also lose benefits on the loans you are consolidating or refinancing.
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. When you resume making payments, your payment could be higher, so talk to your servicer about other repayment assistance options before taking a deferment or forbearance.