What is a Deferred Student Loan?

Find out everything you need to know about deferred student loans and how they can work for you.

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What is a Deferred Student Loan?

A deferred student loan is a type of loan that allows the borrower to postpone making payments on the loan until after graduation. The most common type of deferred student loan is the federal Direct Stafford Loan, which is available to undergraduate and graduate students. Other types of deferred loans include private loans and Perkins Loans.

Deferred loans have several benefits, including the ability to lower your monthly payment by postponing it until after graduation. In addition, if you are having difficulty finding a job after graduation, you may be able to defer your loan payments for up to three years.

However, there are also some drawbacks to deferred loans. One is that interest will continue to accrue on the loan during the deferment period, which can increase the overall amount you have to repay. In addition, if you do not make your payments on time, you may be subject to late fees and penalties.

How Does a Deferred Student Loan Work?

A deferred student loan is a type of loan that allows you to postpone payments until after you graduate. This can be a useful option if you’re having trouble making ends meet during school.

To defer your student loan, you’ll need to contact your lender and request a deferment or forbearance. If you’re approved, your payments will be put on hold for a set period of time. You’ll still be responsible for the interest that accrues during the deferment period, however.

Once the deferment period ends, you’ll need to begin making payments on your loan. If you’re unable to do so, you may be able to extend your deferment or enter into an income-based repayment plan.

If you’re struggling to repay your student loans, a deferred student loan can give you some breathing room. Just be sure to understand the terms and conditions before you defer your loan.

What Are the Benefits of a Deferred Student Loan?

There are a few benefits to taking out a deferred student loan:

-You can often get a lower interest rate than you would with a private loan
-You may not have to start making payments until after you graduate or leave school
-The interest that accrues while you’re in school may be tax-deductible

What Are the Disadvantages of a Deferred Student Loan?

There are several potential disadvantages of taking out a deferred student loan, which include:

-Accruing interest: If you defer your loan, the balance will continue to accrue interest. This means that you will ultimately have to pay more money back than you would if you had simply paid off the loan in a timely fashion.

– damaging your credit: If you defer your loan, it will appear as though you are struggling to make your payments on time. This can damage your credit score, making it more difficult to borrow money in the future.

– missing out on grace periods: Some loans offer a grace period, during which time you are not required to make any payments. If you defer your loan, you may miss out on this grace period and be required to start making payments immediately.

-Higher monthly payments: Once the deferment period ends, you will be required to begin making monthly payments. These payments will likely be higher than they would have been if you had simply paid off the loan in a timely fashion.

How to Qualify for a Deferred Student Loan

To qualify for a deferred student loan, you must:
-Be enrolled in an eligible program at least half-time
-Not be in default on any other student loans
-Not owe a refund on any other federal grants

If you’re not sure whether you meet the criteria above, you can always contact your school’s financial aid office for more information.