Categories :: Consumer > Student Loans

There are several options to help prevent you from defaulting on your loans.  These include Deferment, Consolidation, and Income-based Repayment.

Deferment: Extending the time I have to repay

If you are not in default on your loan, you can seek a deferment, which will postpone your payments.  If you have a subsidized loan, your loan will not be charged interest during deferment.  An unsubsidized loan will gain interest during deferment.  

For FFELs and Direct loans, deferments are available for the following reasons:

  • You are a student enrolled at least half-time
  • You are a graduate fellow
  • You are in a rehabilitation training program
  • You are unemployed and receiving unemployment benefits or are eligible to receive unemployment benefits (see below)
  • You have an economic hardship (see below)
  • You are on active duty in the U.S. military. You can also receive a deferment for thirteen months after your active duty ends.

Unemployment Deferment

This section applies only to FFEL and Direct Loans.

There are two ways to apply for unemployment deferment.

  1. Show that you are eligible to receive unemployment benefits.  To determine eligibility for unemployment benefits, click here (
  2. Provide proof that you are registered with an unemployment office, if one is available within fifty miles of your address, and that you have made at least six diligent attempts at full-time employment within the last six months. If you have not accepted employment because you felt you were overqualified, you will not be eligible for unemployment deferment.

You must request unemployment deferment within six months of the beginning of unemployment. If your loan was made before July 1, 1993, you may receive a deferment for up to 24 months. If your loan was made on or after July 1, 1993, you may receive a deferment for up to 36 months.

To request an unemployment deferment, click here, and follow the directions under "How to Apply" ( Return the form to your loan holder.

Economic Hardship Deferment

This section applies only FFEL and Direct Loans.

If any of the following three things are true, you automatically qualify for an economic hardship deferment:

  1. You have previously qualified for an economic hardship deferment under another federal loan program.
  2. You receive public assistance benefits, such as TANF, SSI, food stamps, etc.
  3. You are serving in the Peace Corps.

The maximum length of an economic hardship deferment is 36 months (3 years).

Income and Employment Status

If none of the above apply to you, you may qualify based on your income and employment status.  If you work full-time and your income does not exceed the federal minimum wage or 150% of the federal poverty level for your family size, whichever is greater, you can get an economic hardship deferment. 

Your family size includes you, your spouse, and your children, including unborn children who will be born during the deferment period.  If other people live with you and those people receive more than half of their support from you, you must include them in your family size.  To find out if you qualify, visit ( and scroll down to the charts in the middle of the page.  Find the income level for your family size and multiply this number by 1.5.  If your income is below that number, you may qualify for an economic hardship deferment. 

Consolidation: Combining Multiple Loans

Consolidation combines all loan payments into one. 

You must have at least one FFEL or Direct loan to qualify for consolidation. 

Usually, you will need to make at least three on-time payments in a row to become eligible for consolidation, or you will have to agree to a repayment plan.  

Go to to get an application for consolidation.  You can also call 1-800-577-7392 or 1-800-557-7395.  Contact your loan provider to discuss your options for consolidation. 

Note that your total balance will increase due to collection fees, and that you can only consolidate your loans once.  

Income Based Repayment Plan: Reducing your monthly payment

Income-Based Repayment Plans were created to make student loan debt payments more manageable by reducing the monthly payment total. 

Under an Income-Based Repayment Plan, a payment amount is generally 15 percent of your discretionary income.(Discretionary income is the difference between your income and 150 percent of the poverty guideline for your family size and state of residence.)


Christopher Sweeney, Maryland Volunteer Lawyers Service

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Is this legal advice?

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