Can You Defer Your Student Loans if You Go to Graduate School?
Understanding loan deferment is crucial. Learn about deferment and how it applies to grad school in this article.
For those asking the question, “if I go to grad school, can I defer my loans?” the short answer is yes. In most cases, if you’re enrolled at least half-time, you should be able to defer payments on your federal student loans and some private loans.
Even though you don’t have to pay student loans while you’re in grad school, interest will accrue if you have any unsubsidized undergraduate loans and for all graduate student loans. That means you’ll increase the amount owed overall. It’s a smart idea to keep making payments if you want to save money throughout the lifetime of your loan.
If I Go To Graduate School, Will My Loans Be Deferred?
If you’re enrolled at least half-time in grad school, you should be able to defer all your federal student loan payments, including any PLUS loans that were borrowed on your behalf. The same goes for if you’re enrolled in an eligible full-time graduate fellowship program.
It’s a smart idea to check with your college’s financial aid office because different schools will have their own definition for half-time enrollment. That way, if you’re unsure of your status, you can find out and understand whether you’ll need to continue making payments. For instance, if you’re only taking one graduate course, you likely won’t count as being enrolled half-time.
Graduate students who have private student loans may find that their lender will allow them to defer their loans — you may also need to be enrolled at least half-time. However, lenders tend to require borrowers to meet additional requirements in order to defer paying their existing undergraduate student loans.
Some lenders, for instance, will ask you to choose deferment as an option right when you take out your undergraduate loan or require you to start grad school during your undergraduate loan grace period. Check with your lender to see what the requirements are and whether you qualify for a deferment.
If you can’t, you’ll need to keep making your usual payments even in graduate school. If you believe you’ll find it difficult to afford payments, you can consider refinancing to a private lender that does allow in-school deferment. If you do, make sure you do it well before you decide to enroll in grad school so you can ensure you qualify for deferment. Juno offers their members access to great refinancing options for undergraduate loans— you can join for free, and there’s no obligation to sign up for a loan.
How Do I Defer Loans While I’m in Grad School?
Once you’ve determined whether you can defer loans while you’re in grad school, you’ll need to ensure you’re following the proper steps in order to do so successfully.
If you want to defer your federal student loans, you can wait for your school to report to the government your enrollment student status. You should automatically receive an in-school deferment if you’re eligible — it should be for your undergraduate and graduate loans.
However, graduate school deferments aren’t automatically given to you — you’ll have to apply for it. What you need to do is fill out a graduate fellowship deferment request form and submit it to your loan servicer (though check to see what else you need first). If you’re eligible, you should be able to defer your loans.
For private lenders, you’ll want to first check if you can defer your loans. If you can’t consider refinancing your loans, as we mentioned earlier. If you can, then contact your private loan lender or servicer about their application process. In most cases, you’ll have to request an academic deferment and may be asked to submit proof of enrollment status.
If you’ve been denied a deferment (or it’s not available as an option for you), you can try for forbearance. This means you’ll postpone your payments, but you’ll accrue interest during that time — applicable for all types of loans. Some private lenders may have a time limit (like 12 months) if you choose to defer your student loans).
You’ll want to carefully consider this option because you may only be able to use it once. For instance, if you experience financial hardship such as losing your job later down the road and you’ve already opted for forbearance, you can’t do that then.
What Are Some Other Alternatives to Grad School Deferment?
If you don’t want to (or can’t) defer your loans and can’t afford to make the full payment, you have several options. For federal student loans, you can enroll in an income-driven repayment plan. That way, your monthly loan payments are capped at a certain percentage of your income, making payments more affordable.
Another option is to make interest-only payments. Since interest may accrue while you defer, going this route will prevent your loan balance from growing. These payments are also more affordable and keep you from paying more overall, a definite perk.
Other than your undergraduate loans, you can also consider refinancing any graduate loans you have now. It means you’ll get a new loan and pay off your old one. Granted, you’ll lose any benefits that come with federal student loans, but the interest savings could be worth it. Juno helps its members negotiate competitive rates for graduate loans, which could save you thousands of dollars in the long run.
Should I Pay My Student Loans While I am in Grad School?
The answer depends on whether you can afford to pay your regular monthly student loan payments while you’re enrolled in graduate school and whether you want to save money on your loans.
For grad students who find it a challenge to squeeze a full monthly payment out of their income, then deferment can be a smart choice. However, if you’re able to make at least interest-only payments (or more), you should since you’ll pay less overall. Before making a decision, look at all your options and see what suits your financial needs the best.
Sarah Li Cain
Sarah Li Cain is a finance writer and a candidate for the Accredited Financial Counselor designation whose work has appeared in places like Bankrate, Business Insider, Financial Planning Association, Investopedia, Kiplinger, and Redbook. She’s the host of Beyond The Dollar, where she and her guests have deep and honest conversations about money affects their well-being.
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