A deferment is a period during which you are entitled to postpone repayment of your loans. If you need to take a semester off from your studies, you are eligible for in-school deferment. In order to qualify for this type of deferment, you have to be enrolled at least half time at an eligible school.
Requesting In-School Deferment
In most cases, if you are enrolled at least half time at an eligible school, your loan will be placed into deferment automatically based on the enrollment information reported by your school. Your loan servicer should notify you that your deferment has been granted. However, if you did not receive automatic deferment, you need to either:
- Ask you school to report your enrollment information, or
- You can complete an In-School Deferment Request form.
NOTE: You need to continue to make payments on your student loans until you have been notified that your request has been granted. Failure to do so could cause your loans to become delinquent and you may go into default.
Interest is not generally charged to you during a deferment on your subsidized loans. Interest is always charged to you during a deferment on your unsubsidized loans. On loans made under the Perkins Loan Program, all deferments are followed by a post-deferment grace period of six (6) months, during which time you are not required to make payments.
When you are responsible for paying the interest on your loans during a deferment, you can either pay the interest as it accrues, or you can allow it to accrue and be capitalized (added to your loan principal balance) at the end of the deferment period.
It is important to understand that if you allow the interest on your loan to be capitalized, it causes more interest to accrue over the life of the loan, meaning it may cause your monthly payments to increase.
NOTE: Unpaid interest is capitalized only on Direct Loans and FFEL Program loans. Unpaid interest is never capitalized on Perkins Loans.
Other Types of Deferment
You need to check in with your financial aid office of your intention to request a semester off from your studies since your school might have their own policies or procedures that you must follow. Additionally, they can advise you if you qualify for other types of deferment based on your situation. Examples of such deferments are:
- Cancer Treatment Deferment
- Military Service Deferment
- Parent PLUS Borrower Deferment
- Rehabilitation Training Deferment
Sara Mahuron specializes in adult/higher education, parenting, budget travel and personal finance. She earned an M.S. in adult/organizational learning and leadership, as well as an Ed.S. in educational leadership, both from the University of Idaho. Mahuron also holds a B.S. in psychology and a B.A. in international studies-business and economics.