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As tuition fees rise and student loan balances inflate, it has become much harder for people to get rid of their loans. This is why you can defer student loans now.
However, the problem occurs when they don’t know how to pay off student loans. Not knowing your options can severely limit your actions and can lead to financial hardship.
What is Student Loan Deferment?
If you subsidized loans and you defer, the interest does not accrue during deferment as the federal government takes care of the interest payments. However, if you defer an unsubsidized loan or opt for student loan forbearance, all the interest is accrued and capitalized and added to the total student loan debt.
Steps to Defer Student Loans
If you feel like you won’t qualify for federal student aid, have to take more loans, or are having trouble paying your loans back, you can defer student loans with the following steps.
1. Do I Want to Defer My Student Loan Payments?
Deciding whether you want deferment can be a tricky thing. However, you can ask yourself the following questions to make an informed decision.
You may be best suited for deferment with a subsidized or Perkins loan since interest does not accrue on them during the deferment period. However, with private and unsubsidized loans, interest will continue to accrue at the current interest rate.
If you’re just going through a bad time and can start making payments later, you should consider deferment. However, if you don’t see your situation getting better any time soon, you might start https://fasterloansllc.com/installment-loans-ut/ considering things like student loan forgiveness programs.
Deferment is only if you can’t make any payments at all. If you can make reduced payments or interest payments, you should consider a different option.
2. Qualifying for Deferment
Student loan deferment is something you need to qualify for and usually involves you working in tandem with your loan servicer or lender. You need to make an application which will then be reviewed and processed. To avoid defaulting, you should continue making payments until your application gets approved.
Private Student Loan Deferment
Private student loans are tricky to defer-you have to contact your lender and first ask if they provide the option of deferment. Some lenders may provide deferment if you’re enrolled full-time or half-time in school, are unemployed, or are part of an active duty military operation.
You may also get economic hardship deferment. However, the interest keeps accruing during that period. It’s best to go for a consolidation loan first.