Expert Debt Management
Expert Debt Management
Understanding Loan Deferment

     A loan deferment is the putting off of a loan repayment, though this is not something that most people ever have personal experience with.  A loan deferment is only offered under very specific circumstances, circumstances that not everyone will experience or be able to qualify for.  Because of this, it is important for your credit score as well as your future buying power to make all of your loan payments on time. Resist temptation to max out your credit cards. In the long run it won't help you to pay off your loan and will only dig your further into debt. If you are having trouble paying off your loan you may want to look into debt consolidation services to reduce your monthly payments so you don't have to consider loan deferment.

     For some loans, such as subsidized FFEL Safford loans you will not have to pay on the principal or interest during the period of deferment, but other types of loans will require you to pay the interest during the period of deferment.  If you do not pay the interest the lender may be able to capitalize the interest when your period of deferment ends, which will mean that you will actually end up owing more money on the principal balance.

     Most students will not be granted a loan deferment automatically, even if they are doing something that qualifies them for the deferment.  Instead, the student must formally request a deferment and you will need to contact your lender to determine what the process is for the formal request.  When you receive information on the process, make sure that you follow it exactly, having all of your paperwork and proof of qualification in the proper order and format.

     Even after you have put in the request for the loan deferment, it is important that you continue to pay on it.  It is not until you actually receive an approval that you should stop paying on the loan.  Remember that you cannot defer a loan that has been defaulted on, so it is important to continue making these payments until you hear back from your lender.  Try to be patient as the process of approving the determent takes some time.

Disclaimer: This site is not , nor should it be taken to be, legal, financial or other professional advice. It merely provides a generalized guidance and generalized information only. Consult a financial advisor or an attorney to discuss any legal or financial issues involved with credit and debt decisions.
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