How Student Loan Deferments and Forbearance Work

Logistics of Deferments

The first step: Fill out an application. You can find the official U. S. Department of Education forms online for both FFEL and Direct Loans [sources: USA Funds, Federal Student Aid: Deferment]. With any application, you're going to have to provide proof that supports your case, such as an official enrollment certification or documentation of public assistance. Each deferment type requires specific evidence that is delineated on the application.

There is no universal application form for requesting a Perkins loan deferment; you must contact your loan holder directly. If the holder is the Department of Education, you may use the sample request letter that appears on the department Web site [source: Federal Student Aid: Federal].

If you're still enrolled in school, you might be able to take advantage of a simpler method. Many colleges and financial institutions participate in the deferment component of the National Student Clearinghouse, a non-profit organization that verifies degree and enrollment information for more than 3,300 higher education institutions. If your lender participates, you only have to call the lender and request a deferment. The deferment is not inevitable, so remember to make any scheduled payments until you're sure it's been approved [source: National Student Clearinghouse].

How long will deferment last? That depends upon the reason for the postponement:

  • Student status: The deferment is in effect while you are enrolled at least halftime.
  • Continuing education: The deferment is in effect throughout your participation in the program.
  • Unemployment: Each deferment lasts six months. You must apply for extensions, and there's a three-year limit.
  • Economic hardship: Each deferment lasts one year with a three-year maximum.
  • Active military service: There's a three-year maximum, but it may end sooner if your service ends.

[source: USA Funds]

If you have any past-due payments, the delinquent part of your loan -- the part that hasn't been paid -- may not be eligible for deferment; it depends upon your lender. You may be able to forbear the outstanding share [sources: Federal Student Aid: Deferment].

During the deferment, if you have an unsubsidized loan, you will be responsible for the interest that continues to accrue. Some borrowers choose to pay just this interest, because any left unpaid is added to your balance due (capitalized) after the deferment. The deferment itself should not negatively affect your credit score, because you are not refusing to pay, and you've gone through the appropriate channels.

When applying for a private loan deferment, the procedures, timelines and limits will depend upon your lender.

If deferment is not right for you, you might be entitled to forbearance. Let's explore that application process next.