Introduction

If you’re a student or have a child in college, the word “deferment” probably brings to mind an image of your loan balance being pushed into the future so that you can focus on school now. This isn’t necessarily a bad thing—after all, higher education is one of the best investments you can make in yourself and your future. But this option has pros and cons that students need to consider before making their decision.

How does a student loan deferment work?

A student loan deferment is an option for federal student loans, but not private ones. If you meet specific qualifications, you can request a postponement for subsidized and unsubsidized federal loans.

If your loan was issued before July 1st, 2014: You may be able to request a postponement if:

• You’re unemployed or working less than part-time (usually 30 hours per week).
• Your school is on break for at least half the year (including summer).
• Your income has dropped below 150% of the poverty line for your family size during the last three months before applying for this type of relief from payments; if this applies, then proof must be provided through tax returns or pay stubs showing how much money was earned during those three months before requesting relief from payments due on student loans held by Navient Corporation – formerly known as Sallie Mae Bank.*

What are the pros of a moratorium?

A deferment is a temporary postponement of payments on your student loans. If you’re in school and facing financial hardship, it might be worth considering whether or not to take advantage of this option.

Deferment is available to students enrolled in a full-time degree program at an eligible institution (two-year or four-year). You may also qualify if you’re serving with AmeriCorps, Peace Corps, or other volunteer programs; unemployed while seeking employment; experiencing economic hardship due to unemployment or underemployment; experiencing medical problems that cause income reduction; serving as the primary caregiver for dependent children (or parents) under age 19; attending school at least half time while working full time at least 30 hours per week; suffering from permanent disability and unable to work full time due to disability.

What are the cons of a moratorium?

• Interest accrues on the loan during deferment.
• You cannot pay off your loan in full during a deferment period, making it hard to get out of debt faster.
• The longer you wait to repay your student loans, the more interest builds up over time, making them even harder to pay off later on.

What are the long-term financial consequences of a student loan deferment for my family?

If you’re considering a student loan deferment, it’s essential to understand the long-term financial consequences of doing so. Suspensions can help you avoid defaulting on your loans and keep credit scores intact, but they also mean that interest will continue to accrue on those debts. This means that when the deferment period ends and payments resume full force, borrowers may find themselves owing more than they originally borrowed, with higher monthly payments!

In addition, deferments can impact credit scores because they add another month (or years) during which no payment is made toward paying off debt. When lenders look at your history of making timely payments over time, this can lead them to think negatively about whether or not you’ll be able to keep up with future payments if necessary for them not only evaluate whether or not someone should get approved for something like a mortgage but also determine what kind of interest rate would be appropriate given their risk level associated with issuing such an asset based upon previous behavior patterns seen within industries where similar products exist today.”

How can I ensure I don’t fall behind on my payments while I’m in college or during an approved deferment period?

To make sure that your loans don’t become delinquent, consider the following:

• Make the minimum payment each month. If you can afford more, try to pay off as much of your principal as possible.
• Pay as much as possible in advance, then set up auto-payments for the rest. This way, there is no chance of missing a payment or forgetting about making one (which could lead to late fees).
• Use a student loan repayment calculator to determine how much monthly money is needed based on interest rates and loan balances. Put that amount into an account dedicated solely towards paying down debt so it doesn’t get spent on other things!

Will my credit score be affected by a student loan deferment?

A student loan deferment does not affect your credit score. A credit score is based on several factors, including:

• The amount of debt you have
• Your ability to pay your bills on time and in full each month
• How much available credit you have (i.e., how many loans or lines of credit you have open)

Student loan deferments have pros, cons, and long-term financial impacts.

Student loan deferments have pros, cons, and long-term financial impacts.

Pros:

• A moratorium can help you avoid defaulting on your loans. If a borrower stops making payments on their federal student loans for any reason, they can be considered in default and have their credit score negatively impacted. Deferment gives borrowers time to catch up on missed payments without worrying about going into default status while still enrolled in school or participating in some other program that qualifies them for deferment status (such as public service or unemployment).

Cons: *Interest continues to accrue during a deferment period which increases your overall debt balance over time if left unpaid during this period of nonpayment.* There may be additional fees associated with applying for federal student aid, such as processing fees charged by schools, which are usually around $50 per semester but could vary depending on where you go.* Some states offer state-sponsored repayment plans that allow eligible individuals who meet specific criteria, including income levels based on family size; however, these programs do not always cover all types of student loans, such as private ones taken out through banks/lenders outside of federal programs like Stafford Loans offered through Sallie Mae – so keep this factoid in mind when considering how much money might come out after taxes each month even after subtracting monthly payments towards debts owed.”

Conclusion

Student loan deferments have pros and cons, but the long-term financial consequences can be significant. If you’re considering taking advantage of this option, ensure you understand all the impacts on your finances before deciding whether or not it’s right for you.