A hardship deferment is a temporary suspension of student loan payments given to borrowers who are having trouble repaying their loans. The length of the deferment varies depending on the lender and the nature of the difficulties, and interest will typically continue to accrue on the loans for the duration of the deferment. In order to receive a hardship deferment, one must make a formal request to the lender.
Within reason, many lenders are willing to grant hardship deferments. If a person loses their job, incurs unexpected expenses, or lives in an area with a very high cost of living, a hardship deferment is frequently granted. A deferment is usually possible, especially if the borrower only wants to delay payments for a month.
It is usually necessary to contact the lender and explain the situation in order to apply for a hardship deferment. A loan officer can sometimes simply make a note in the account granting the deferment for temporary deferments like a one-month deferment. For longer deferments, an application detailing the applicant’s income, expenses, and the situation for which the deferment is requested is usually required.
Applying for a hardship deferment as soon as a hardship is identified is preferable to waiting until the last minute before a payment is due. While some lenders will suspend payments while the deferment is being reviewed, if the deferment is denied, the applicant will be responsible for any missed payments. Others anticipate payment until the deferment is granted, and failure to make a payment can result in denial.
A formal letter will be sent to the applicant once a hardship deferment has been approved, stating that he or she has been granted a deferment and the length of the deferment. Fewer are longer than six months; those who require long-term deferments may be required to apply again. A lender can revoke a deferment if it determines that the applicant is capable of making payments again, and applicants can also end the deferment making a payment if they feel ready to begin repaying their loans.
Most lenders offer a six-month “grace period” in addition to hardship deferments. Many people use their grace period during the six months following graduation, but it can also be used at other times. Some lenders also allow people to miss payments on a regular basis arrangement, especially if they always pay on time and have legitimate reasons for missing a payment.