What to Do if You Can't Afford Repayment
What to Do if You Can't Afford Repayment
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It can be tricky to stay on top of your monthly loan payments, especially if you’ve struggled to find a well paying job, or any job at all, after graduation. There are several options to consider if you are having trouble making payments on your loans for any reason. You need to act quickly to avoid the long-lasting negative consequences of missed payments.

Switch to a different repayment plan.

Contact your loan servicer to see if you can switch to a repayment plan with a longer repayment period. This would lower your monthly payments. You may also be able to switch to one based on your income, so that your monthly payments are only 10%–20% of your paycheck. These plans would allow you to continue to provide for yourself while making smaller monthly payments. Learn more about repayment plans here.

Request a deferment.

A deferment is a period of time during which you temporarily delay the repayment of the loan, typically for up to three years. While you will not have to make monthly payments against the principal amount of your loan, you may still have to pay all accumulating interest.

The government may pay interest on a Perkins Loan or Direct Subsidized Loan for you during deferment. However, you must pay interest on Direct Unsubsidized Loans and PLUS Loans. You can pay the interest upfront during your deferment period or choose to have it added onto the principal balance of your loan to be repaid once your deferment period ends.

The table below lists common deferment types, the maximum length of each deferment, the eligibility criteria and the eligible loans. This is not an exhaustive list, and there are other reasons for which you can request a deferment. The following deferment types mainly apply to loans made on or after July 1, 1993. If your situation does not match any of the listed deferments, feel free to check here or here, or contact your loan servicer to determine if you are still eligible for a deferment.

To request a deferment, you will need to contact your loan servicer and/or your school’s financial aid office. You can also find applications and learn more here.

Deferment Type Length Qualifications Eligible Loans
Student No limit
  • Enrollment at least half-time at an eligible institution
  • First loan taken out after July 1987
 Direct Subsidized, Direct Unsubsidized, Direct PLUS, Perkins
Graduate fellowship No limit
  • Full-time enrollment in a graduate fellowship program that provides a financial award for at least six months
  • Entrance into program that required a written statement of purpose
  • Program requires student to submit progress reports
  • Must have a bachelor’s degree and acceptance to the graduate study or fellowship program
 Direct Subsidized, Direct Unsubsidized, Direct PLUS, Perkins
Parent of a dependent student No limit while student is enrolled at least half-time; up to six months after enrollment falls below half-time
  • PLUS Loan disbursed after June 30, 2008
  • The dependent student for whom the loan was used is enrolled at an eligible school at least half-time or is within six months of falling below half-time enrollment
 Direct PLUS
Rehabilitation training program No limit
  • Full-time enrollment in a rehabilitation training program (addressing the needs of the Department of Veterans Affairs or providing vocational support, mental health services, or drug and alcohol abuse rehabilitation) with a specific end date
  • Enrollment in the program makes it so that you cannot be employed 30 or more hours per week for at least three months
 Direct Subsidized, Direct Unsubsidized, Direct PLUS, Perkins
Unemployment: for borrowers who are unemployed, working less than 30 hours weekly, or working full-time for a maximum of 90 days Up to 36 months
  • Eligibility for unemployment benefits
  • Must be currently attempting to find full-time employment and registered at an employment agency
 Direct Subsidized, Direct Unsubsidized, Direct PLUS, Perkins
Economic hardship and Peace Corps Up to 36 months One of the following applies:

  • Serving as a Peace Corps volunteer
  • Working full-time for monthly income less than federal minimum wage or 150% of the poverty line
  • Receiving payments from a public assistance program
 Direct Subsidized, Direct Unsubsidized, Direct PLUS, Perkins
Military service No limit
  • Serving on active duty or in the National Guard during a war or national emergency
 Direct Subsidized, Direct Unsubsidized, Direct PLUS, Direct Consolidation, Perkins
Post-active duty student Up to 13 months
  • Service with the National Guard or Reserves
  • Called to active duty while enrolled in school at least half-time or within six months prior to being called to active duty
  • Activated retirees are eligible
 Direct Subsidized, Direct Unsubsidized, Direct PLUS, Direct Consolidation, Perkins

Other types of deferments are offered to students who took out their loans before July 1, 1993. You may qualify if one of the following situations applies to you:

Request forbearance.

If you don’t qualify for a deferment, you can request forbearance from your loan servicer. Forbearance allows you to stop making or to reduce the amount of monthly payments on a loan for up to 12 months. However, interest will continue to accumulate during a period of forbearance. There are two types of forbearance.

  • Discretionary (or general) forbearance: The lender decides whether to grant you forbearance. You can request discretionary forbearance because of financial hardship or illness. If your forbearance expires and you are still experiencing financial hardship or illness, you can request another forbearance.
    • There is a three year cap on discretionary forbearances for Perkins Loan holders.
    • There is no cap on discretionary forbearances for Direct Loan holders, but your loan servicer may enforce a time limit.
  • Mandatory forbearance: Your lender must grant forbearance if one of the following is true:
    • You are serving in a medical or dental residency program or internship.
    • The amount you owe each month is greater than or equal to 20% of your total monthly income.
    • You are serving in a national service position (AmeriCorps) and received a national service award from the Corporation for National and Community Service.
    • You are performing a teaching service and qualify for loan forgiveness.
    • You qualify for repayment under the Department of Defense (DoD) student loan repayment program. This means that you are a highly qualified employee of the DoD, or you are being offered a repayment package during recruitment or to be retained as a highly qualified employee of the DoD.
    • You are an activated member of the National Guard but are not eligible for a military deferment.

To request forbearance, you will need to contact your loan servicer. In some cases you will have to provide supportive documentation for your request. You must continue monthly payments until your request for forbearance has been granted.

Page last updated: 05/2018

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