DEFERMENTS

During deferment, the lender allows you to postpone repaying the principal of your loan for a specific period of time.

Most federal loan programs allow students to defer their loans while they are in school at least half time. For Perkins Loans and Subsidized Stafford Loans, no interest accrues during the deferment period because the federal government pays the interest. For other loan programs, such as the unsubsidized Stafford loan, the interest still accrues during the deferment period. Students can postpone the interest payments on such loans by capitalizing the interest, which increases the size of the loan. (Capitalizing the interest adds it to the loan principle. This increases the amount of the debt, which means you'll be paying interest on interest, in addition to interest on the principal.)

Deferments are commonly granted for:

• students who are enrolled in undergraduate or graduate school
• disabled students who are participating in a rehabilitation training program
• unemployment
• economic hardship

These deferments are for the FFELP and FDSLP loans, not the Perkins loan. Other deferments may also be available; contact your lender for details. Note also that there are limits on the length of a deferment.
Deferments are not granted automatically. You must submit an application and provide documentation to support your request for a deferment to your lender/loan servicer. Do not stop making payments on your student loans until after you are notified that your deferment has been granted.

Grace Period and Deferment for Parent PLUS Borrowers
For PLUS loans made to parents that are first disbursed on or after July 1, 2008, the ECASLA (Ensuring Continued Access To Student Loans Act) provides the borrower the option of beginning repayment on the PLUS loan either 60 days after the loan is fully disbursed or not until six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled on at least a half-time basis.

For PLUS loans that are first disbursed on or after July 1, 2008, the HEA now requires that the interest that accrues on the loan from the date of the first disbursement until 60 days after the loan is fully disbursed be capitalized for parent PLUS borrowers who do not elect to delay repayment on the loan based on the dependent's enrollment status, and for all graduate and professional student PLUS borrowers. Lenders must notify borrowers of the capitalization and provide them the opportunity to pay the capitalized amount of accrued interest.

For parent PLUS borrowers who opt to delay repayment on a PLUS loan until six months after the dependent student for whom they borrowed ceases at least half-time enrollment, the interest that accrues on the loan prior to the delayed repayment start date may be paid, at the option of the borrower, either monthly or quarterly, or may be capitalized no more frequently than quarterly.

For interest that accrues on PLUS loans during an authorized deferment period, the borrower may choose to pay the interest either monthly or quarterly, or have it capitalized no more frequently than quarterly.