If you’re struggling to pay your student loans, it’s tempting to pause them altogether. Deferring student loan payments is one way to stop the bills, but it might not be your best option.
Even if you meet the eligibility requirements of student loan deferment, you could be better off with another approach. Otherwise, the debt you have today could grow into an even bigger burden tomorrow.
If your reasons match any of the three below, reconsider whether deferring student loans is the right choice.
1. You don’t feel like paying your student loans yet
Your first student loan bill after graduation can be a rude awakening. You’ve only just left school, and now you’re expected to pay off your debt every single month. As a new grad, you can probably think of lots of other, more fun ways to use your money.
But even if you qualify to defer student loans, you shouldn’t necessarily choose this option. For one thing, deferring student loans might put an even bigger financial burden on Future You.
Unless you have subsidized federal loans, interest will continue to accrue on your federal student debt. Once deferment ends, you could end up owing more than when you started. You can calculate how deferment affects your monthly payments using our deferment calculator.
Karla Garcia, a student loan borrower and owner of Sweets by Karla, learned this lesson the hard way. “I deferred my student loans for about four years and it was a big mistake,” she said. “My loans accrued a lot [of] high interest. They went from about $35,000 to $55,000.”
Because she chose to defer student loans, Garcia’s debt grew by a whopping 57 percent.
Deferment might be the right choice if you’re really struggling to make ends meet. But if you can make payments — even if it means sacrifice in other areas — you’ll be in better financial shape in the long run.
Being financially responsible isn’t always fun, but it’s the best decision you can make after you graduate.
2. You haven’t explored all your repayment options
Deferring student loans should be seen as a last resort in the case of extreme economic hardship or other qualifying events. Paying back some of your debt, even if you can only do so a little at a time, is usually preferable to pausing payments altogether.
If your income is low and you have federal student loans, explore your options for income-driven repayment (IDR). Repayment plans like Income-Based Repayment extend your loan terms to 20 or 25 years. Plus, they cap your monthly bills at 10 to 20 percent of your discretionary income.
Note that these plans only apply to federal student loans. If you have private student loans, speak with your loan servicer to see if you’re eligible for a more flexible repayment plan. Either way, learn about all your options before committing to deferment.
James Pollard, the founder of The Advisor Coach, wishes he started paying his student loans sooner:
“When I was in college, I deferred my student loans,” he said. “Looking back, I wouldn’t have waited … It was a mistake to defer the student loans because they’re still there — I wish I would’ve taken whatever I had and started to chip away at them.”
Instead of deferring student loans, consider whether you can repay your debt a little at a time under a new repayment plan.
3. You’re letting frustration get the better of you
For many borrowers, the thought of student loans is often accompanied by complicated emotions. Some borrowers feel they were tricked into taking on a lot of debt as teenagers. Others feel resentment after dealing with sketchy loan servicers that gave them harmful misinformation.
But even if you qualify to defer student loans, your decision shouldn’t come from frustration. In fact, pausing your student loans will probably hurt you much more than your lender. Federal student loans never go away, plus interest will just make your debt grow bigger.
“I put my student loans in deferment three times,” said Yolanda Rambert-Marshall, who owed $25,000 in student loans. “If I had to do it all over again, I would [have] asked for a reduction in the price I was paying each month instead of putting it in deferment. You come out better in the long run by continuing to pay your loan.”
Even if you’ve dealt with unfair practices, your best option is to pay off your student loans as fast as possible. Those student loans won’t go away until your balance hits zero.
Good reasons to defer student loans
Though continuing to make payments is often a wise decision, deferring student loans can be a smart financial choice in some situations. If any of these scenarios apply to you, it might make sense to defer your student loans.
- You’re hovering near default. If you’re about to go into default, deferring student loans could give you the relief you need. Once you’ve paused your payments, you can figure out how to get back on your feet.
- Your financial hardship is short term. Deferring student loans can help you through a rough patch, such as a medical issue that leaves you unable to work for a few months. As long as you don’t defer student loans for a long time, you shouldn’t rack up too much interest.
- You’ve been called into active duty military service. Not only can pausing your student loans help you during your service, but you might have opportunities for student loan repayment assistance in the future.
Deferring student loans can help you through an emergency or break from work. If you need more long-term relief, though, reducing your student loan payments through an income-driven plan could be the better approach.
Make the best decision for your finances
If your student loans are overwhelming, it’s tempting to deal with them at a later date. But you can’t predict the future or know what other expenses you’ll have down the line.
If you truly can’t make payments, deferring student loans could be a useful option. Before pausing your payments, though, make sure to learn about your options for student loan repayment.
With this knowledge, you can choose the best repayment plan for your wallet. Plus, you’ll stay on track to getting out of student loan debt as fast as possible.
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