Deferment
EducationGlossary term
Definition
A temporary postponement of student loan payments granted under specific circumstances, such as returning to school, military service, or economic hardship. During deferment, interest does not accrue on subsidized loans, but it does continue to accrue on unsubsidized and PLUS loans. You must apply for deferment through your loan servicer and provide documentation of your qualifying condition.
Related terms
- Forbearance (Student Loans)A temporary reduction or suspension of student loan payments granted when you are experiencing financial difficulty but do not qualify for deferment. Unlike deferment, interest continues to accrue on all types of federal loans during forbearance, which can significantly increase your total debt. Forbearance should generally be used as a last resort after exploring income-driven repayment plans and deferment options.
- Grace Period (Student Loans)A set period of time after you graduate, leave school, or drop below half-time enrollment during which you are not required to make payments on your federal student loans. For most federal student loans, the grace period is six months, giving you time to find employment and get financially settled. Interest continues to accrue on unsubsidized loans during the grace period, so making payments early can save you money.
- Subsidized LoanA type of federal student loan available to undergraduate students with demonstrated financial need, where the government pays the interest while you are enrolled at least half-time, during your grace period, and during deferment. This makes subsidized loans one of the most affordable borrowing options for students because interest does not accrue during these periods. Eligibility and loan amounts are determined by your school based on your FAFSA results.
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