Key Points
- Deferment lets borrowers pause federal student loan payments during hardship or unemployment, often without interest on subsidized loans.
- Current deferment options (like economic hardship and unemployment) can last up to 36 months but require annual re-certification.
- Starting July 1, 2027, new borrowers will lose access to these deferments under the One Big Beautiful Bill Act.
Student loan deferment allows you to temporarily pause your federal student loan payments without going into default. During this time, certain loans (such as Direct Subsidized Loans and Perkins Loans) do not accrue interest.
Borrowers have traditionally used deferment when they’re unemployed, facing financial hardship, serving in the military, or enrolled at least half-time in school.
Deferment is different from forbearance. While both pause payments, forbearance always allows interest to build, while subsidized loans in deferment do not.
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Most Common Deferment Types
The three most common types of student loan deferment are economic hardship, unemployment, and in-school deferement.
Economic Hardship Deferment
This option helps borrowers who are struggling to meet basic expenses or earning very low income.
Eligibility:
- You must receive certain means-tested federal or state benefits (like SNAP or TANF), or
- Your income is below 150% of the federal poverty line, or
- You serve in the Peace Corps.
Duration:
- You can receive economic hardship deferment for up to 36 months, typically certified in 12-month increments.
Interest:
- Interest does not accrue on subsidized loans during the deferment.
- Unsubsidized loans will still accrue interest.
Upcoming Change:
Effective July 1, 2027: Under the One Big Beautiful Bill Act, borrowers who take out new federal loans on or after that date will no longer qualify for economic hardship deferment.
Borrowers with loans disbursed before July 1, 2027 will still retain access to this deferment under current rules.
This means future borrowers facing financial hardship will need to rely on income-driven repayment (IDR) or limited forbearance instead.
Unemployment Deferment
This deferment assists borrowers who are out of work or working part-time while actively seeking full-time employment.
Eligibility
- You are unemployed and receiving unemployment benefits, or
- You are working fewer than 30 hours per week and actively seeking full-time work.
Duration:
- Up to 36 months total, usually in 6-month increments.
Interest:
- Subsidized loans do not accrue interest during unemployment deferment.
- Unsubsidized loans do accrue interest.
Upcoming Change:
Effective July 1, 2027: Borrowers who receive federal loans on or after this date will not be eligible for unemployment deferment under the OBBBA.
Those who borrowed earlier keep their current rights, but new borrowers will need to explore IDR or short-term forbearance for relief.
In-School and Other Deferments
Several other deferments remain available, including:
- In-School Deferment: For students enrolled at least half-time in an eligible program.
- Military Service Deferment: For active-duty service members and certain post-active-duty periods.
- Cancer Treatment Deferment: For borrowers undergoing active treatment and for six months afterward.
These deferments are not affected by the 2027 legislative change.
Full List Of Student Loan Deferment Options
|
Program Name |
Time Limit |
Restrictions |
|---|---|---|
|
Action Programs Deferment |
36 Months |
|
|
Armed Forces Deferment |
36 Months |
|
|
Cancer Treatment Deferment |
During Treatment Plus 6 Months |
|
|
Economic Hardship Deferment |
36 Months & Must Reapply Annually |
|
|
Graduate Fellowship Deferment Program |
No Limit |
|
|
In-School Deferment Program |
No Limit |
|
|
Internship/Residency Deferment Program |
No Limit |
|
|
Parental Leave Deferment |
6 Months |
|
|
Peace Corps Deferment |
36 Months |
|
|
Post-Active Duty Student Deferment |
13 Months |
|
|
Military Service Deferment |
No Limit |
|
|
Tax Exempt Organization Volunteer Deferment |
36 Months |
|
|
Teacher Shortage Area Deferment |
36 Months |
|
|
Temporary Total Disability Deferment |
36 Months & Must Reapply Every 6 Months |
|
|
Unemployment Deferment |
36 Months & Must Reapply Every 6 Months Ending for new loans after July 1, 2026 |
|
|
Working Mother Deferment |
12 Months |
|
|
PLUS Borrower with Dependent Student Deferment |
No Limit |
|
FAQ
Do existing borrowers lose deferment options in 2027?
No. The change applies only to new loans disbursed on or after July 1, 2027. Existing loans retain current deferment eligibility.
Can I still get a deferment if I’m in school or in the military?
Yes. In-school, military, and cancer treatment deferments remain available under the new law.
What if I lose my job after 2027 with new loans?
You’ll need to apply for an income-driven repayment plan (RAP, IBR, etc.) or use limited forbearance for up to 9 months in 24 months.
Are interest benefits changing for subsidized loans?
No — subsidized loans will still suspend interest during approved deferments like in-school or military service.
What To Do If You Anticipate Hardship
Current borrowers still have access to both economic hardship and unemployment deferments through at least mid-2027. If you expect to face unemployment or economic struggles after 2027:
- Enroll in an income-driven repayment plan early. Payments can drop to 0 if your income is low enough.
- Plan for limited forbearance. Under OBBBA, you’ll get fewer total months of payment pauses.
- Keep documentation. Even if you have older loans, verify disbursement dates to prove eligibility for current deferment rules.
- Budget ahead. Expect fewer ways to pause payments without interest, so build an emergency buffer where possible.
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The post How Student Loan Deferment Works and What’s Ending appeared first on The College Investor.
