PLUS Loan Deferment
When you’re approved for deferment, you won’t owe any payments on your loan for a certain amount of time. This will offer you a relief period while giving you time to save up some money. During this time, interest will be added to the loan, but this interest will be at the same rate as it was when you weren’t in deferment. So even though you don’t owe a payment during this period, the interest will continue to add to the loan. However, if you have a Subsidized Stafford Loan, then no interest will be added during the deferment.
Your deferment options may vary, depending on what kind of loans you have. One of the best options you should consider is consolidation prior to deferment – consolidating immediately improves your credit rating, and lets you take advantage of other financing options, while preserving your rights to deferment and forbearance.
PLUS deferment options are based on the parent borrower's eligibility – for example, if the parent is unemployed, not the student on whose behalf the parent took out the loan. Principal and interest payments may be deferred while the parent borrower is:
- Attending school at least halftime.
- Unemployed (up to three years).
- Studying in an approved graduate fellowship or rehabilitation program for the disabled.
- Experiencing economic hardship (up to three years).
- Or while the student is attending school at least half time. Note: This is one repayment option. Parents can also elect to make payments while the child is in college.
If the borrower is unable to make regular principal and interest payments, the lender may accept interest-only payments or the student may be able to defer payments with a capitalized interest forbearance. A forbearance may be granted at the lender's discretion, but only in accordance with preset guidelines. If at any time during the repayment period a student is unable to make a required payment, they should immediately contact the servicer to seek advice on obtaining a temporary cessation of payments. A forbearance will grant an extension of the principal and interest of the loan. Interest charges will be capitalized (added onto the principal of the loan) once the student begins repaying again.
Forbearance May Be Granted for the Following Reasons
- Partial Disability
- Other documented hardship
Eligibility for Interest Subsidy During Deferment
Consolidation loan applicants may be eligible for deferment of interest if the consolidation loan includes only subsidized Federal Stafford Loans, subsidized Federal Consolidation Loans or Federally Insured Student Loans.