As soon as graduation happens, student loan payments begin to loom even closer on the horizon. In most instances, these payments don’t happen immediately, but they’ll start requiring action within several months.
But post-grads often wonder if there are other ways to hold off on loan payments. What if I want to go to grad school? What if I travel abroad for awhile? What if I have a certain job that helps pay for student loans? are questions that begin to form. In today’s IonTuition blog, we’re exploring loan deferment and can hopefully provide some guidance and student loan assistance to help answer each of these questions (and more). Learn more in our blog, and see how colleges, employers, and brokers can all benefit from the IonTuition student loan assistance programs!
What is loan deferment?
A student loan deferment (also known as a forbearance, but these things are slightly different — we’ll get into that later) is a way to pause your student loan payments, or to temporarily reduce the amount that you have to pay. It doesn’t eliminate your student loan debt, rather, it allows you to put it on hold.
We’ve covered a lot of ground talking about loan forgiveness, where part of student loan debt is eliminated completely. With loan deferment, you still need to pay your loans, but you can put your payments on hold.
How is a deferment different than a forbearance?
With a loan deferment, there’s a chance that you won’t have to pay for accruing interest that happens with certain types of loans. Specifically, if you have a subsidized loan, a Federal Perkins loan, or subsidized portions on certain consolidation loans, you’ll likely not need to pay for interest. If you have an unsubsidized loan, you’ll most likely need to pay for the interest.
With a forbearance, you will still be responsible for paying the interest. You may either pay it as it goes or allow it to continue growing and then pay for it all later. The latter option is of course the less ideal choice, because you’ll end up owing more than before you originally did before the loan forbearance.
Why defer student loans?
There are a number of reasons why someone might look into loan deferment. In most instances, deferment happens because the person with loans is having (or will have) a hard time making payments. Here are some examples of why someone might defer their student loans:
- Unemployment: People have the option to defer their student loan payments if they’re experiencing a period of unemployment.
- Financial Hardship: Those who receive federal benefits may qualify for student loan deferment. The intent is to help people get back on their feet, to then resume loan payments when they’re ready.
- Making Less Than Minimum Wage: If a person is working full time but making less than the minimum wage, they can also qualify for student loan deferment.
As of December 2018, this has not yet become a law, but there’s a good chance that in 2019, a new provision will pass that allows patients undergoing cancer treatment to defer their loans. Post-grad students could defer their student loans while receiving treatment.
Do certain jobs qualify for deferment?
There are certain full-time volunteer or service options, or other life circumstances that make it possible for you to defer your loans. Take a look at some of the options:
Signed into law by President John F. Kennedy in 1961, the Peace Corps is a (minimum) two-year commitment in which participants volunteer abroad. If you enroll in the Peace Corps at some point after graduation — there’s no upper age limit to joining — you can defer your student loans during your service.
Full-Time Teacher (in certain areas)
If you’re teaching in a place that’s considered a “teacher shortage area,” you can qualify for deferment. However, your deferment cannot exceed 36 months (three years).
If you have a graduate fellowship, you’ll likely automatically qualify for loan deferment. If you don’t have a fellowship, but are attending graduate school, you may also be eligible for in-school deferment.
Going Back to School
If you had been enrolled in college, stopped, then re-enrolled, or are going back to get a different degree, you can defer your student loans. This is similar to how you can defer loans while in grad school.
Interns can usually qualify for deferment on their loans. Oftentimes, this is because they are either working unpaid, or around or below minimum wage to gain the necessary experience to advance their career.
Active duty military members, or military members who are responding to an emergency, also have the ability to defer their student loans. There’s no maximum time on this deferment, as long as the active duty started anytime on the day of or after October 1st, 2007.
If six months after leaving school you have a child or adopt a child, you can essentially get parental leave on your loans. Just as parents usually get leave of absence at their jobs while caring for a newborn, you have the same option in regards to loan deferment. After six months, you’ll need to start paying your loans again.
Working for the National Oceanic and Atmospheric Administration makes you eligible for student loan deferment. As is the case for full-time teachers, the maximum amount of time that you can defer your loans is 36 months.
If you are disabled, or are caring for somebody who is disabled, you can likely defer your student loans. Part of this entails being unable to work or make money for at least 60 days, or if you’re continuously caring for somebody who is disabled for at least 90 days (and are subsequently unable to work or make money).
Working mothers who “have young children, return to the workforce after leaving school, and make no more than $1 per hour over minimum wage,” are able to defer their student loans, according to Nelnet. This deferment option is available for working mothers who are employed full-time, and can last no more than 12 months.
Is deferring student loans good?
It all depends on the circumstances. We’re going to continue with that topic in our next blog, helping you weigh out the pros and cons of deferring student loans. In the meantime, know that IonTuition can supply your business with incredible student loan assistance programs that can help your employees (and your business as a whole). Our product includes IonMatch, IonPay, IonLearn, and IonManage tools that everyone will enjoy