How long does student loan deferment last

Can I get a deferment of my federal student loans if I am on NJ unemployment?

Yes, you can. Many people down here in the Gloucester County, New Jersey area have experienced job loss and are surviving on unemployment. Thus being able to get into a deferment for this reason can be very beneficial.

However, if losing your job causes you to stop making your loan payments because you can no longer afford them, you need to get into the deferment as soon as possible.

The reason for this is that, unlike an economic hardship deferment, which is retroactive to the date the hardship began, an unemployment deferment can only go back six months. Why is this important?

Well, suppose you stopped making your payments 250 days ago because you lost your job, and you are almost in default (270 days). If you apply for the unemployment deferment, it will not bring you current!

How do you qualify for an unemployment deferment? Well, there are two ways:

  • Be registered with a public or private employment agency located within 50 miles of your home (and be seeking work)
  • Provide proof of eligibility for unemployment benefits

The deferment, once you get it, is good for a maximum period of time:

  • 2 years if there is a loan balance prior to July 1, 1993
  • 3 years if all your loans originated after July 1, 1993

Should you find yourself out of a job, the first thing you need to ask yourself is whether this situation creates an economic hardship. If it does, get that deferment to keep from going into default, and then look to see if an income based repayment plan can help.

If you live in New Jersey and are struggling with payment on federal student loan debt because you became unemployed, I may be able to be of assistance. Just download this questionnaire, fill it out, and then fax it to me at 856-686-9911 or e-mail it to me. I will then review it to determine if I can be of assistance and contact you to discuss representation.

What Are Student Loan Deferment and Forbearance Programs?

Making student loan payments can sometimes be a struggle. You might not know what to do if you're having trouble finding work, are still in school or recently had a financial setback.

Making late payments or missing payments has consequences that can be costly and harmful to your credit. Discover Student Loans doesn't charge any fees for the life of the loan, but many servicers do, including for late payments. Fees can either be a fixed amount or a percentage of your minimum payment. Signing up for automatic monthly payments is one way to help prevent late payments, and most servicers offer an interest rate discount, so you will also save some money.

After late or missing payments, the servicer may report this to the credit agencies, which may negatively impact your credit score. Therefore, it's important to talk to your servicer as soon as possible, before you make a late payment or miss a payment, to discuss your situation and see what options you have. For struggling borrowers, two common routes are putting their loans in deferment or forbearance.

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:

  • Unemployment
  • 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.

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.

Student loan consolidation may also be an option to help you manage your loans and lower your monthly payment. Discover Student Loans offers student loan consolidation as does the federal government.

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.

Deferment vs forbearance: What's the better way to postpone student loan debt payments?

How long does student loan deferment last

How long does student loan deferment last

When you graduated you promised to pay your loans . And you meant to.

But then you went to grad school . Or your rent got out of control , and your  new job pays  way less than expected. Or you lost your job . 

No matter the reason, it is important to recognize when you're in trouble — you do not want to become one of the more than 40% of Americans who have gotten three months or more behind on student loan repayments.

Even falling late by less time might slide you into a danger zone:  Delinquency and default can seriously  hurt your credit .

If this sounds like you, remember that you might be able to take advantage of programs that will keep you from drowning: loan deferment and forbearance .

Most people recognize these two phrases as something having to do with student loans.

But what do they mean? What is the difference? And which is better?

Here are the answers.

A deferment on your student loan means that repayment of both the principal and the interest accumulating is temporarily delayed  for up to three years .

Only certain people are eligible: More on that below.

For three types of federal loans, the government will pay your interest during the deferment, so it won't keep growing out of control. These are  Direct Subsidized Loans ,  Subsidized Federal Stafford Loans  and  Federal Perkins Loans .

But for unsubsidized loans , the interest will continue to accrue.

You won't have to pay it while your loan is in deferment, but be well aware that it is being added to the total amount you will need to pay later.

A forbearance on your student loan is for people who aren't able to make their regular student loan payments, but don't qualify for a deferment .

A forbearance is a break, for up to 12 months, from having to make payments. 

But during a forbearance, interest continues to accrue on your principal debt on both types of loans: subsidized and unsubsidized.

You can pay the interest while in forbearance or not, but you will be expected to pay the total amount when you resume payments.

The upside is that you get a temporary break to get your ducks in a row — and your credit score stays intact in the meantime.

Deferment is available under many different circumstances : Qualifying reasons  you can request deferment include active duty military service, certain graduate fellowships, certain rehab programs for people with disabilities, and unemployment or economic hardship.

For service members, if you are in college at least half time when you are called to active duty and plan to return to school upon your return, you are eligible for a deferment of up to 13 months after your qualifying service.

Remember: No one is going to ask you if you need a deferment.

You need to submit a request to your loan servicer — the company to which you send your payments. Also, if you're in school at least half time and are looking for a deferment, you'll need the OK of your financial aid office, too.

There are two types of forbearance — discretionary and mandatory — and the eligibility requirements differ.

To receive a discretionary forbearance you need to apply for the break and your lender makes the decision whether or not to grant it you. 

The reasons that could make you eligible for a discretionary forbearance are financial hardship or illness.

A mandatory forbearance of your loan means that if you meet the eligibility requirements, your lender must grant it to you. 

Those requirements are: if you're serving in a medical or dental internship or residency program; if the total amount of student loan payments each month is 20% or more of your total monthly gross income; if you're serving in a national program of service  for which you've won an award; if you are included in the U.S. Department of Defense Student Loan Repayment Program ; or if you're a National Guard member and have been called to duty by a governor, but you are not eligible for a military deferment.

As with deferments, no one is going to come around saying, "You sure look like you could use a forbearance."

You will need to ask your loan servicer for a forbearance and provide documentation showing your need.

Here's how to decide whether to ask for a deferment or forbearance

If you want to take action to avoid delinquency and default, deferment and forbearance are great tools. But they offer different benefits and are used in different situations. 

If you are falling behind, you always want to see if you are eligible for a deferment first. This is because, at least with subsidized loans, the interest does not accrue while your loan is deferred.

Even if you have an unsubsidized loan, a deferment is still preferable because in certain circumstances the deferment period can be up to 3 years — while the standard forbearance period is 12 months.

It's true that you can get up to 3 years of forbearance, but you will need to re-apply for each 12-month period to extend it.

Federal loans allow you to get only  3 years of forbearance total.

Private lenders also offer forbearance, but the terms — who is eligible and how many times you may ask for and receive forbearance — are up to the lender.

Plus, all private loans in forbearance accrue interest.

Because forbearance and deferment on unsubsidized loans will cost you more in the long run — due to accrued interest — be sure you have a plan to pay it all off when the time runs out.

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