It is actually advisable to pay your student loans even if they are in deferment.
Deferment is among the options that can offer financial relief when you find yourself struggling to pay your student loans, usually as a result of financial hardships and difficulties. This is only a short-term option that will temporarily reduce or suspend your payments for your student loan.
When the payments for your student loans are in deferment, it is a must that you know if the interest is going to accrue in the case of unsubsidized loans and if you will have to bear the responsibility for the payments on interest.
If you will be responsible for the accrued interest while the student loan is deferred, it will be more beneficial for you if you continue paying your loan. If deferment extends the length of your loan, this will continue to accrue interest that will only further increase the loan’s overall cost. When you continue making payments, when the loan’s duration comes to an end, it will decrease the overall cost through the loan’s life.
When there is no need for you to make payments and you won’t have any responsibility for the accumulated interest, it will still work to your advantage if you continue to make payments for your student loan when and if you can while it is still in deferment. This is because these payments will reduce your total balance.
A lot of people are worried about the negative effects of deferment on their credit scores. However, the good news here is that your credit score won’t be hurt if you are in deferment even though potential lenders will be able to see it.
How to Defer Student Loans
You can request a deferment to have your federal student loans deferred. Most of the time, deferments are not really automatic. There is a need for you to submit the request to the student loan servicer, usually using a form you should fill out. This will prove that you meet all the requirements to be eligible for deferment. When you get approved, your federal student loans can be deferred for a maximum of 3 years.
There are actually seven circumstances or conditions that can make you qualified for federal student loan deferment. These include:
- Economic hardship
- Graduate fellowship
- In-school deferment
- Post-active duty and military service
- Parent PLUS borrower deferment
- Rehabilitation training deferment
- Unemployment deferment
Once you become eligible for an income-drive repayment plan, every payment made will count to the debt forgiveness programs in which after 20 or 25 years of loan repayment, the rest of the debt will be forgiven.
If the loan is in deferment, that time is not going to count to the20 to 25 years that are necessary for debt forgiveness, extending the life of the loan for the specific amount of time that your loan is in deferment.
Having said all this, it means that paying your student loans even if they are in deferment can work more to your advantage.