Top 5 Reasons to Defer a Federal Student Loan

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Many—if not most—college students today need to use student loans in order to pay for school. Unfortunately, circumstances after graduation don’t always make repaying student loans an easy process. Fortunately, federal loans can be deferred under several circumstances. You just need to meet the criteria for deferment, and you may be excused from making loan payments for up to three years.

5 Graduate Fellowships

One lesser-known alternative for deferment of student loans is a graduate fellowship. In order to qualify, you need to have attained at least a bachelor’s degree. If you qualify, you can maintain the deferment until you complete or leave the fellowship program.

4 Military Service

If you are in the military or join the military after school, you have a few different deferral options available to you. Active duty service personnel can defer their loans while on duty and for up to 13 months thereafter. You can also defer your loans if you’re called up for duty while you’re attending school at least half-time.

3 Back In School

If you have graduated, but decide to return to school to complete a bachelor’s degree or graduate degree, you may be able to defer repayment of your student loans. Students enrolled at least half-time in a qualifying post-secondary program can defer repayment of their loans for as long as they’re in school. The principle behind this type of deferment is to afford students an opportunity to improve their career prospects without forcing them to work a job to repay their previous loans.

2 Economic Hardship

Economic hardship is another reason borrowers tend to defer student loan payment. Underemployed borrowers may find making their student loan payments overly burdensome. Deferment helps to alleviate some of the financial pressure that comes with a lower income. Economic hardship deferment is also available to volunteers in programs such as the Peace Corps or AmeriCorps.

1 Unemployment

The most common reason borrowers choose to defer student loan payments is unemployment. Without a steady source of income, repaying college loans is a struggle. In the post-recession economy, unemployment is a serious issue for borrowers and lenders alike, since the under- and unemployment rates for college graduates younger than 25 hovers around 50 percent.

Trent Jonas accepted his first freelance assignment in 1988 from "The Minnesota Daily" and has been writing professionally ever since, primarily as a copywriter. He has experience in advertising and entrepreneurship, as well as writing on legal and travel topics. Jonas has a Bachelor of Arts in English writing from the University of Minnesota and a Juris Doctor from Hamline University School of Law.

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