Loan Deferment

Debt consolidation may be able to help reduce your monthly payments enough that deferment isn’t necessary. Deferment is a postponement of repayment under various, specific circumstances. It is best to pay loans as soon as possible to improve your credit.

For certain types of loans like Federal Perkins, subsidized FFEL Stafford and subsidized Direct Stafford, you don’t have to pay principal or interest during deferment.

For unsubsidized FFEL Stafford Loans, unsubsidized Direct Stafford Loans, FFEL PLUS Loans, and Direct PLUS Loans, you can postpone paying principal, but you are responsible for interest of PLUS Loans. You can pay the interest during the deferment period, or the loan holder can capitalize the interest when the deferment ends.

Please note that capitalization will increase the loan balance.

Schools must automatically defer your Federal Perkins Loans during the time you perform any service that qualifies you for loan cancellation. But, in most cases, you aren’t just granted a deferment automatically; you must formally request one through the procedures your loan holder has established. Make sure all your paperwork is in order and make sure the loan holder receives it.

Important Note: You must continue to make payments on the loan until you’ve been notified the deferment has been approved.

Even if the paperwork is received without any problem, it takes few days to process. So, don’t skip the next payment when it’s due. First, check with the loan holder. If your deferment has not been processed, make your payment. You might go into default otherwise. You can’t get any deferment on a defaulted loan.