Which Banks Offer Deferred Student Loans?

Deferred student loans are offered with grace period or deferral options, based on your financial situation. The deferment may not be extended up front in all cases; in some cases, a deferral is granted only after a borrower has successfully sourced a loan and begun repayment. Depending on your loan structure, you will see a wide variety of deferral options.

Subsidized Federal Loans

Federal student loan subsidies make it possible for the neediest students to avoid paying loan debt until after graduation. In addition to this extended grace period, these loans will have the lowest interest rates. In order to qualify, you must fall within the income requirements of the loan program. These direct loans are given in both subsidized and unsubsidized forms, and only the neediest students will be eligible for the subsidy.

Loan Grace Periods

Even if you do not receive a subsidy on your loan, you may ask for a grace period when you apply for your loan and source the funds. The grace period will typically end upon your graduation. However, some students prefer to have the loan payments start 6 months after graduation, giving them time to locate an income before making payments. You should be aware interest on your principal debt may continue to grow during this grace period. This means you will have to pay more to finance the loan over time. You may also be asked to make interest payments on the loan during the grace period, called an interest-only loan option. Some lenders may allow you to take an interest only option while attending school then start paying the loan principal down after your graduation.

Federal Loan Deferral

If your loans are through federal programs, then you will have to seek deferral through the federal government. Deferral is possible in most cases where your loan is in good standing and you have a pressing financial crisis. For example, if you have lost your job, you may defer your loan payments for a short period of time. The main factor considered is whether you made an honest effort to pay the loans before the financial crisis you are experiencing. You should also note that it is important to show the situation will not change in the immediate future. For example, if you are out of work for a few weeks only, you will not likely receive a deferral option.

Private Loan Hardship Deferral

Even if your private loan did not have a deferral option in the contract, you may be able to elect a hardship deferral in the future. Again, this typically occurs only when you experience an immediate financial hardship. The same rules apply for private loans as do for federal loans: you need to make an honest effort to repay the loans prior to the hardship. Students who have not been able to start repaying loans at all will have a harder time opting for a deferral; in this case, you may seek a forbearance, which is a halt in enforcement even though your loan payments are still due.

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