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Guide to Deferring Student Loans in Grad School

Deferring Student Loans in Grad School: Things to Know
Rebecca Safier
Rebecca SafierUpdated August 15, 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.
When you go to graduate school, chances are you’re not ready to make payments on your student loans at the same time. In fact, you’ve probably wondered, if I go to grad school can I defer my loans? Fortunately, in many cases, the answer is yes. Typically, federal student loans are automatically placed in deferment while you’re enrolled at least half-time in graduate school. You can also apply for deferment if you’re enrolled in a graduate fellowship program. However, your deferment options will vary depending on whether you have federal or private student loans. Here’s what you need to know about how to defer student loans while in grad school.

What Is Student Loan Deferment?

Deferment allows you to postpone payments on your student loans without penalty. You’ll have to pay the loans back eventually, but you can pause payments temporarily while you qualify. The government offers automatic student loan deferment on Direct, FFEL, and Perkins loans during graduate school. If your loans have not been automatically deferred, reach out to your loan servicer about making this change. If you’re in a fellowship program, deferment is not automatic. You’ll have to request it from your loan servicer. And if you have private student loans, your options for deferment will vary by lender.Many private lenders will allow you to pause payments when you go back to school, but you’ll have to check with yours to find out what it permits and any steps you need to take. 

Do I Have to Pay My Student Loans While In Graduate School?

You don’t have to make payments on your federal student loans while you’re enrolled at least half-time in graduate school. If you have PLUS loans, you can postpone payments on them for an additional six months after you graduate. If you have private student loans, however, you should check with your lender about their policy. Many may let you defer payments while you’re in school, but some may not. Even if they do, the process may not be automatic, so it’s wise to contact them to find out. 

If I Go to Grad School, Can I Defer My Undergrad Student Loans?

If you go to graduate school, you can defer both your undergraduate and graduate student loans. Deferment is usually automatic on federal student loans once the office of Federal Student Aid receives enrollment information from your school.However, it’s worth signing into your Federal Student Aid account to make sure everything looks as it should. 

Deferring Federal Student Loans

Federal student loans should be automatically deferred when you go to graduate school. If there’s a problem, contact your loan servicer and request a deferment using the In-School Deferment Request form. If you’re in a graduate fellowship program, you can request a deferment with the Graduate Fellowship Deferment Request form. Most of the fellowship programs are available to doctoral students, but some might be available to master’s degree students as well. 

Deferring Private Student Loans

In general, many private lenders let you pause payments while you’re in graduate school through student loan forbearance or deferment. If you have private student loans, reach out to your lender or loan servicer about your options. They may require you to send documentation that shows your enrollment in the qualifying degree or fellowship program. Or they may have additional criteria you will need to meet.

Benefits of Deferring Student Loans While in Graduate School

The main advantage of deferring student loans while you’re in graduate school is that you don’t have to worry about making payments. You can focus on earning your degree and use your funds for books, housing, and other living expenses rather than on student loan payments. And because deferment lets you pause payments, you don’t have to be concerned about your loans going into delinquency or default. Defaulting on student loans has many bad consequences, including wage garnishment and damage to your credit. If your payments are deferred, however, your loans won’t end up in default. Deferment also has a perk for any federal subsidized student loans you borrowed as an undergraduate. The government covers interest on Direct subsidized loans during deferment, so your balance won’t grow during this time. 

Disadvantages of Deferring Student Loans While in Graduate School

However, deferment isn’t the right choice in every situation because it has a major downside: Interest will keep accruing on all student loan types except for Direct subsidized loans. That means interest charges will keep adding up on your unsubsidized loans, PLUS loans, and any private student loans. As a result, you could face a much bigger balance when you graduate than you had when you started graduate school. What’s more, this interest will be added to your principal balance when the deferment ends. This is known as interest capitalization, and it essentially means you end up paying interest on top of interest. If you want to reduce your long-term loan costs, you might consider making interest-only payments while you’re in graduate school, or using another strategy for reducing your payments, instead of pausing them completely. 

Other Ways of Reducing Payments on Student Loans

Here are some options for lowering your student loan payments while you’re in graduate school. 

Income-Driven Repayment Plans

If you have federal student loans, you may be able to adjust your payments to make them more affordable with an income-driven repayment plan. President Joe Biden has created the Saving on a Valuable Education (SAVE) Plan, which replaces the existing Revised Pay As You Earn (REPAYE) Plan. Borrowers on the REPAYE Plan will automatically get the benefits of the new SAVE Plan.The SAVE Plan, like other income-driven repayment (IDR) plans, calculates your monthly payment amount based on your income and family size. The SAVE Plan provides the lowest monthly payments of any IDR plan available to nearly all student borrowers.Starting next summer, borrowers on the SAVE Plan will have their payments on federal undergraduate loans cut in half (reduced from 10% to 5% of income above 225% of the poverty line). Recommended: Your Guide to Choosing a Student Loan Repayment Plan

Refinance Your Student Loans

Another option you might consider is to refinance while in school. Refinancing involves taking out a new student loan with a private lender to replace one or more of your existing loans. Depending on your credit, you could qualify for lower interest rates than you have now. In addition, you can choose new repayment terms when you refinance student loans. Some lenders let you opt for a term as long as 20 years or more, which could result in lower student loan payments. However, being in debt for longer can lead to higher overall interest charges. If you choose a long loan term while in grad school, you might make extra payments later to pay off your debt faster. But refinancing while in school comes with drawbacks. One of the biggest disadvantages is that refinancing federal loans and replacing them with a private loan means losing access to federal protections, including federal deferment, income-driven repayment, and federal student loan forgiveness programs. Also, another difference between federal and private student loans is that with private loans, you will need to start repaying them monthly once the loan is issued.

Refinancing Student Loans With Lantern

As mentioned, there are pros and cons of refinancing student loans. If you need access to federal protections and programs now — or expect you will in the future — it likely wouldn’t make sense to refinance your federal student debt. However, if you won’t be taking part in these programs, or if you want to refinance private student loans, refinancing might help you get a lower interest rate.Lantern by SoFi makes it easy to check your rates with different lenders so you can decide if refinancing is a good option for you at this time.

Frequently Asked Questions

Can you defer student loans if you go to grad school?
How long can you defer student loans for?
How many times can you defer student loans?
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About the Author

Rebecca Safier

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
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