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Can I Defer My Loans if I Go to Grad School?

If you have plans to attend graduate school, you may be wondering if you have to pay your student loans while pursuing your degree. In most cases, the answer is no. You can defer payments on federal loans and some private loans if you’re enrolled in grad school at least half-time. 

Although you can defer your loans, this may not be your best option since you’ll still accumulate interest. If you can afford to make many payments during grad school, you’ll probably save money in the long run. Read on to learn more about the benefits and drawbacks of deferment during grad school. 

How does loan deferment during grad school work? 

When you defer your student loans, you postpone making payments for a certain period of time. Normally your loans would go into default if you stop making payments. When you defer your loans, though, you can stop paying without penalty. Fortunately, students attending graduate school can defer their student loans in most cases. There are two deferment options for grad students and they work for all federal and some private loans. 

1. In-school deferment 

All federal student loan payments can be deferred if you’re enrolled in graduate school at least half-time. Direct PLUS Loan borrowers get an extra six months of deferment after dropping below half-time status. You can also defer some private student loans if you’re enrolled at least half-time. While some private lenders offer deferment, not all of them do. If you have private debt, check with your lender to see if you qualify for deferment. Also keep in mind that universities have their own definition for half-time enrollment, so check with your school if you’re unsure about your status. 

2. Graduate fellowship deferment 

Graduate fellowships are programs that provide financial support for students pursuing graduate studies and research. Students enrolled in approved graduate fellowship programs can qualify for loan deferment. Federal loans are eligible for deferment, but private lenders may have their own requirements. 

Benefits of deferring student loans 

If you’re enrolled in grad school and not making much money, loan deferment can be very helpful. Since you won’t have to make monthly student loan payments, you’ll have more room in your budget for school and living expenses. You also won’t have to worry about defaulting on your student loans, which can result in damaged credit scores and even wage garnishment

Deferment is especially useful if you have subsidized direct loans. Interest does not accrue on subsidized loans while they’re in deferment, meaning your debt balance won’t grow while you’re in school. 

Drawbacks of deferring student loans 

The downside to deferment is that you’ll continue to accrue interest on your loans (unless you’re deferring a subsidized loan). This means your debt will continue to grow and you’ll probably owe more money than you did when you started. Not to mention, if you’re pursuing student loan forgiveness then a period of deferment typically doesn’t count toward that goal.

See also: Scholarships for graduate students

Should I defer loans in grad school? 

Grad school loan deferment only makes sense if you truly can’t afford your monthly payments. If you’re on a tight budget during grad school and you’re worried about defaulting on your loans, then deferment is the best option. 

Just know that deferment is a temporary solution and that you’ll likely pay more money in the long run. You’ll continue to accrue interest on unsubsidized loans, which will increase the overall cost of the loan. You’ll also be extending the terms of your loan, so paying it off will take longer than originally expected. 

After obtaining your degree, though, hopefully you’ll be better positioned financially to pay back your loans. After all, one of the top reasons to attend grad school is to increase your earning potential.

How do I defer loans in grad school? 

If you think student loan deferment is your best option, this is how to go about it: 

In-school deferment for federal loans 

In-school deferment for federal loans usually occurs automatically. Your school will report your enrollment status to the government, and you’ll receive in-school deferment if you’re eligible. If this doesn’t happen (and you meet eligibility requirements) ask your school to report your enrollment information or fill out an in-school deferment request

In-school deferment for private loans 

Unlike federal student loans, in-school deferment doesn’t automatically occur for private student loans. If you have private student loans, you’ll have to request a deferment. Policies regarding private loan deferment vary, so check with your lender or servicer about its process. 

Graduate fellowships deferment 

If you’re seeking a graduate fellowship deferment, you’ll need to submit a graduate fellowship deferment request to your federal loan servicer. 

Think carefully about your options

Make sure to weigh the benefits vs. drawbacks of deferment during grad school. Remember, your loans will still accumulate interest during deferment. Good luck!

Learn more: Grad school financing options