How to pause or lower student loan payments while in school

Ways to pause student loan payments

Paying off your student loans while you’re still in school isn’t the easiest thing to do. There are so many other things to pay for, and student loans might be the last thing on your mind. Luckily, you’ve got options to help make repayment a bit easier. Let’s break down deferment, forbearance, refinancing, and other repayment options to see which one may be right for you.

Deferment

Deferment is when your student loan payments are paused or temporarily lowered for a certain period of time. If you have federal student loans, they may automatically be placed into deferment once you’re enrolled at least half-time in an eligible college or program. They will remain in deferment for as long as you’re enrolled and through your grace period after you’ve graduated or left school.

Note: If you have federal subsidized loans, the government will pay your interest for you if you’re in deferment. 

Forbearance

If you’re struggling financially, forbearance may be an option for you. Forbearance is when your student loan payments are temporarily paused or lowered when you’re experiencing financial hardship. This can be helpful if you need some breathing room while you’re paying back your student loans, but remember that interest will accrue (grow) during forbearance if your principal remains unpaid.

Refinancing

Refinancing is when you get a new loan that will replace your existing one(s). The new loan will have a new interest rate and terms, and it may even come with a new lender.

This won’t pause your payments like deferment, but it can help make paying easier by switching out multiple loans for just one, and possibly at a lower interest rate, too.

If you refinance your student loans with a private lender, keep in mind that there will likely be a credit check before you get your new interest rate and terms.

Changing repayment plans

If you're currently on a standard 10-year repayment plan for federal student loans, you may have the option to switch to an extended repayment plan or an income-driven repayment plan. While this could result in paying more interest over the loan's lifespan, it can lower your monthly payments in the immediate future.

Pros and cons of student loan deferment

There are many reasons to choose deferment, but it’s important to know reasons not to as well. Here are some pros and cons of deferring student loan payments.

Pros of deferment  

You may have money to dedicate to other expenses 

Got other bills to take care of? Things you’re saving up for? Deferring your student loans may help you free up some cash to use for something else.

Interest won’t accrue with subsidized federal student loans

If you have a subsidized federal loan or a Stafford Loan, the U.S. Department of Education will pay any interest you accrue during deferment. So, your total loan cost won’t increase when you finish school. 

Deferment or forbearance can help you avoid default

If you’re struggling to make your payments and need some time to reset and reassess your finances, a deferment or forbearance may help keep your loans from becoming delinquent or put into default.

There won’t be any impact to your credit score

If you defer or enter into forbearance, your loan status will remain current, so your credit won’t be affected.

Cons of deferment 

Interest may add up

Deferment doesn’t mean your loan goes away. With unsubsidized loans, interest will keep stacking on top of your principal amount while you’re not paying it. When you’re ready to start paying again, you may be dealing with a much bigger bill than you had before.

Repayment may take longer

When you defer your loans, you’re extending the amount of time it will take to pay them back.

The potential to receive student loan forgiveness may be delayed

For many programs, you have to pay back your loan for a certain amount of time to be eligible for student loan forgiveness. The amount of time you spend in deferment will not count towards forgiveness, so you’ll have to wait longer for forgiveness.

How to defer your student loans

Deferment may be a good option if you can’t make payments while in school. Your lender may automatically put your loans in deferment once you enroll at least half-time in a program. 

If you’re not sure if your loans have been deferred, reach out to your school ASAP. Let them know you want to defer your loans while in school. Then, they’ll provide proof of your enrollment to your lender to start the deferment process.

Keep track of any documents related to your deferment and ask about when your payment start date will be so you aren’t surprised by a bill.

Ultimately, you’ve got options to pay back your student loans. Your choice will come down to your unique situation and what makes sense for you.