Guide to Deferring Student Loans When Going Back to School

Q: Can I defer student loans if I go back to school for another year?

If you have federal student loans, you can usually defer them while you're attending school. Similarly, most private student loan lenders also allow you to defer your student loans while you're in school as well.

Q: How long can you defer student loans while you're in school?

You can defer your student loans for the entire duration that you're enrolled in college. You also get a grace period, which means that you don't have to start repaying your loan until you've been out of school for six months. If it takes you six years to earn your degree, you can defer your student loans during those six years plus another six months of a grace period.

Q: Can I pause my student loan payments while in school?

Yes, you can pause your student loan payments if you're going back to school with student loans. In most cases, your school will communicate with your loan servicer about your status in school — you must be in school at least half time. (Note: In terms of the current pause, note that federal student loan payments may resume as late as 60 days after June 30, 2023.)

Deferring Student Loans When Going Back to School

Melissa BrockUpdated February 13, 2023

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

If you have federal student loans, you can often delay repaying them if you’re still pursuing higher education. Deferment means that you can postpone payments as long as you enroll at least half-time in an eligible program.Deferring student loans when going back to school can help students better manage their finances, because they can focus on school instead of paying back student loans. Read on to learn more about this important topic, including:

How to defer student loans when going back to school
How to apply for deferment
What are the pros and cons of student loan deferment
What are some options to student loan deferment.

What Is Student Loan Deferment?

Using your student loans may be a great way to help you go back to school. But if you're wondering, "Can I go back to school if I have student loans?" you may be concerned about stretching your dollars. You may want to consider pausing repayment on your loans, especially if you'll have limited income. Student loan deferment is a temporary postponement of loan payments as long as you are enrolled in an eligible institution. You will automatically receive an in-school deferment as long as your school makes your loan servicer aware of your status. Your loan payments will pause while you're enrolled in school. This pause will also remain in effect for six months after you graduate or leave school. You typically may have to pay the interest on your deferred loan. You must pay the interest that accrues on:

Direct Unsubsidized Loans
Unsubsidized Federal Stafford Loans, Direct PLUS Loans
The unsubsidized portion of Direct Consolidation Loans
The unsubsidized portion of FFEL Consolidation Loans.

In general, you do not need to pay the interest on:

Direct Subsidized Loans
Subsidized Federal Stafford Loans
Federal Perkins Loans
The subsidized portion of FFEL Consolidation Loans.

Note: Federal student loan payments are currently paused. Federal student loan payments may resume as late as 60 days after June 30, 2023. You’ll want to keep this in mind as you consider your student loan options and repayment plans. Recommended: Will Biden’s One-Time Student Loan Forgiveness Happen?

If I Go Back to School, Will My Loans Be Deferred?

As long as you are enrolled at least half-time in an eligible college or career school, your loan goes into deferment automatically. You should not have to complete the In-School Deferment Request. Your loan servicer will notify you based on information reported by the school you plan to attend.Private student loans are not eligible for federal deferment programs. However, you can defer private loans in most cases. Check with your private student loan servicer — they may also have alternate options available when paying back student loans.

How to Defer Student Loans When Going Back to School

How do you defer student loans? As mentioned above, your student loan servicer for federal loans will automatically defer your loans as long as you're in school. For example, if you plan to go into a four-year graduate program, the loans could stay in deferment throughout that time as well as six months after graduation. If your loans don't automatically go into deferment, you can let your school know so it can confirm your enrollment in the institution with your loan servicer.

Pros of Deferring Student Loans

The benefits of deferring student loans includes:

Frees up cash: If you need to make sure you have enough cash to handle daily expenses without having to worry about paying student loans, getting a deferment might make sense for your daily needs.
No long application process: You don't have to endure a long application process when you go back to school because the school you attend will communicate it to your loan servicer.
Some interest does not accrue: Certain loans do not accrue interest when deferred while you're in school. You do not need to pay the interest on Direct Subsidized Loans, Subsidized Federal Stafford Loans, Federal Perkins Loans, and the subsidized portion of FFEL Consolidation Loans.

Cons of Deferring Student Loans

You may be wondering, "If I go back to school will my loans be deferred? If so, what are the downsides of deferring student loans?" While delaying repaying your loans may sound like a win-win, keep the following in mind:

No progress on loan payments: One of the biggest downsides of deferring payments on your student loans is that you don't make progress on paying your loans. Postponing the payments means that they will last that much longer.
Interest accrues: Interest can accrue, or build, on your loan while you're in school. amount of interest could accrue on your unsubsidized loans. Direct Unsubsidized Loans, Unsubsidized Federal Stafford Loans, Direct PLUS Loans, the unsubsidized portion of Direct Consolidation Loans, and the unsubsidized portion of FFEL Consolidation Loans.

Consider both the pros and cons before you decide whether you should defer your student loans or not.

Other Options Besides Deferment

Deferment isn't your only option if you’re heading back to school and wondering how to handle your debt. Let's take a look at a few other options, including student loan forgiveness, continuing to pay student loans, and refinancing student loans.

Student Loan Forgiveness

Student loan forgiveness allows you to not have to pay back some or all or part of your student loans. Here are a couple of examples of student loan forgiveness:

Public Service Loan Forgiveness (PSLF): PSLF is available for Direct Loans and allows you to forgive the remaining balance on your Direct Loans. You must have made 120 qualifying monthly payments under a qualifying repayment plan. You must also work full-time for a qualifying employer. FFEL Program loans and Perkins Loans may become eligible for PSLF if they are consolidated in the Direct Loan program.
Teacher Loan Forgiveness: Teaching full-time for five consecutive and complete academic years in a low-income elementary, secondary, or educational service agency may allow forgiveness of up to $17,500 on your Direct or FFEL Program loans.

Continuing to Pay Student Loans

If you think that pumping the brakes on student loans isn't the best way to handle your student loans, you could continue to make your student loan payments while you're in school. After all, student loan debt can continue to accrue interest, depending on the type of loan you have, as described above. Every extra dollar you put toward paying off student loans will lower your principal student loan balance. Consider this option instead of deferring your student loans while you're in school, if you can afford to do so.

Refinancing Student Loans

Refinancing student loans, whether federal or private, means that a private student loan lender turns your loans into one new loan with new terms. Refinancing can offer various benefits:

For example, if you want to shorten the amount of time you'll pay on your loans, you can get a shorter loan term.
On the other hand, if you're struggling to make your payments, you can lengthen your loan term.

However, there are potential downsides, too. It's important to note that:

If you refinance federal student loans, you'll forfeit federal loan benefits including deferment. You also forfeit income-based repayment plans and forbearance.

The most common outcomes from refinancing include getting a lower interest rate, switching to a variable rate (one that changes) to a fixed rate (a rate that stays the same), to get a lower monthly payment or shorter loan term. Or you might enjoy consolidating the loan to one payment for convenience. You can even refinance while still in school.

Student Loan Refinancing With Lantern

Now that you know how to defer student loans when going back to school, you may decide that refinancing is an option you can explore. If so, Lantern can help you easily find and compare numerous options for refinancing student loans options. Enter a few basic details, and you’ll quickly and conveniently see offers that might include the right type of student loan refinance for your situation.Let Lantern show you your student loan refinancing options, the quick and easy way!

Frequently Asked Questions

Can I defer student loans if I go back to school for another year?

How long can you defer student loans while you're in school?

Can I pause my student loan payments while in school?

Photo credit: iStock/simarik

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About the Author

Melissa Brock

Melissa Brock is a higher education and personal finance expert with more than a decade of experience writing online content. She spent 12 years in college admission prior to switching to full-time freelance writing and editing. Her work has appeared on Yahoo Finance, Entrepreneur, Investopedia, The Balance, FinanceBuzz, The Journal of College Admission, MarketBeat, College Finance, Rocket Mortgage, LeverageRx, Benzinga, Morty, Ally, and more.

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