How to Defer Your Student Loans – 5 Options to Extend or Postpone Paying Back School Loans

books piggy paidWhen I was in college, every semester I received a check from the federal government for text books and living expenses (read: beer). I didn’t give much thought to how I was going to pay the student loans back until the day after graduation, when a bill for $12,000 landed in my mailbox.

In retrospect, I got off easy, as many college kids have more than $100,000 of student loans they need to repay. But whether you have a little or a lot, interest builds quickly, and it’s best to create a solid plan for paying back the debt that works with your financial situation.

What Are Your Options?

It’s virtually impossible to completely cancel your student loans unless you die or become permanently disabled (neither of which I recommend).

However, there are a few ways you can extend or postpone your payments for certain loans:

  1. Deferment. Under certain conditions, your payments may be excused for a set period of time. The most common ways that your loans may be deferred are: if you go back to school, you’re having difficulty making payments due to unemployment, or you’re having other financial problems in your life. You generally will not be able to defer your loans if you have defaulted on previous payments.
  2. Forbearance. If you are facing personal problems in your life that could get in the way of your ability to repay your loans, the holder of your loan may allow you to stop making payments for a specified period of time. If you face medical or personal problems or can’t repay your loan in the maximum time frame, you may be able to qualify for forbearance on your federal loans.
  3. Extended Repayment Plan. On a standard repayment plan, you will be paying your loans back over the course of 10 years. If you have taken out more than $30,000 in student loans, you may be eligible to stretch your payments out over 25 years.
  4. Graduated Payment Plan. A graduated payment plan allows you to start off with lower payments in the early years, but those payments increase later on. This option is good for graduates who will be struggling right after college but expect to make a lot of money a couple years later.
  5. Income-Based Repayment Plan. Your loan may be adjusted based on your income, family obligations and the number of loans you have outstanding. This number will be reconfigured each year.

You will have to check with your lenders to see which options they allow. The Federal government generally is more forgiving than private lenders.

Delaying Your Payments Should Be a Last Resort

It is tempting to look for a loophole to take your time paying back your loans, but whenever possible you should try to pay them back as scheduled. Extended and graduated payment plans allow you to pay less each month, but in the long-term you can end up spending tens of thousands of dollars more due to interest. If you can afford it, consider paying your loans off faster than required. The faster you pay off your loans, the less interest will accumulate. If you use a repayment plan calculator, you will probably be surprised how much money you will save if you increase your monthly payment. Finally, look for private companies that will consolidate your student loans, if you have more than one. Using a peer-to-peer lending network like Lending Club might not be a bad idea in some cases either.

Final Word

Certain lenders will give you a lot of discretion as to how long you take repaying your student loans. You may be given the chance to take your time paying off your loans, but that doesn’t mean that you should take it. With interest rates where they are, delaying or suspending your payments can be a costly decision.

However, some people face certain life situations that may make it difficult or impossible to pay their loans off on time. If you are having a hard time getting a job or have become seriously ill, it is good to know that you may be able to get help. Make sure you check with your lender to see what your options are and how you should proceed.

Are you making progress paying off your student loans? Have you utilized any of the methods mentioned above? Share your thoughts and insights in a comment below.

  • Jessica, The Debt Princess

    I have over $15,000 in school loans. I graduated from college in 1997 with just under $15,000 in student loans. I have paid on them off and on for years. I’ve always had financial problems (I’m working on fixing this now!) and any payments I made over the years have gone to paying back the interest I’ve earned when I wasn’t paying on them.

    If you are on a forebearance (or maybe it’s the deferment) you will still be responsible for the interest each month. If you do not pay it, it goes right back onto the principal balance.

    Moral of your article (in my opinion) & my comment…Borrow mindfully. If you have to take them out, be very smart about how much you borrow and think about the future. It may seem like paying them will be easy when you graduate but it isn’t always that way.

    Sorry for the long reply. I could write a whole post on this (and maybe I should, lol ).

  • Kalen Smith

    I am sorry to hear that. You are right you will be paying interest if you defer. The only thing I need to point out is that it isn’t always possible to graduate with small amounts of debt given the cost of getting an education and the limited resources of people who need to borrow in the first place. But at least be mindful of what you are taking money out for. More expensive housing and a new laptop may not be good if you can get by with what you have. Also, try to get grants and scholarships when possible so that you can minimize the amount of debt you take out.

  • No-one

    taking out a deferment or forbearance is the last thing you should do. Sell a kidney before you to that. My $70,000 loan is now over $300,000 thanks to this. I could easily pay off the original amount now, but not the $300,000 and climbing (I cannot afford the monthly payments), but AES will not even consider negotiating. Now I live in another country and am clinically depressed. And they can still get you abroad too, unless you really move to China or some other country like that.

  • Riain S

    I decided to fake my own death. So far, so good! I’m really enjoying life in Mexico, and my mom bought a new house with my life insurance payout!

  • jhmom

    I am writing on behalf of my daughter who is in college at tht present. The school that she is attending is short of teachers in her field of study and has to fall back to one class this semester. She is terrified that she will have to start paying for her loan before she gets out of school. Any advice on what she can do?

    • willgtl

      If she is still attending school, she should be eligible for deferment, which will stop both the payments and interest clock (Forbearances just stop payments, but the clock is still running) until it expires. You are not expected to repay student loans while still attending school, even part-time enrollment. If she has an unreasonable private loan issuer, instead of a federally subsidized loan, she would need to contact her issuers and discuss it. But as far as a federal student loan, she should have no problem getting a deferment until she graduates.

  • alex

    Also, don’t forget that serving in the Peace Corps can get you a deferment and in some cases pay off part of your loan as well. I served and had my loan deferred for the period I was in the Peace Corps. More details here.