How Student Loan Deferment Works and What’s Ending

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	Must be a full time paid volunteer in ACTION programs Must agree to serve at least one year Download the application here: Public Service Deferment Request
Armed Forces Deferment	36 Months	Must be on active duty in the armed forces of the United States (Army, Navy, Air Force, Marine Corps, or Coast Guard) If you are in the reserves, you may qualify if: You are serving full-time for at least a year or are serving under an order of national mobilization. You must submit a copy of your military orders to your loan holder Download the application here: Public Service Deferment Request
Cancer Treatment Deferment	During Treatment Plus 6 Months	You are eligible to receive a deferment on your student loan payments during your cancer treatment and 6 months after. You are initially allowed up to 1 year, but may provide a doctor's note if your treatment will exceed that period of time. Download the application here: Cancer Treatment Deferment Request
Economic Hardship Deferment	36 Months & Must Reapply Annually Ending for new loans after July 1, 2026	You are receiving payment under a federal or state public assistance program, such as Temporary Assistance for Needy Families (TANF), Supplemental Social Security Income (SSI), Food Stamps, or state general public assistance You are working full-time and your total gross monthly income is less than or equal to the larger of the monthly federal minimum wage rate or 150% of the poverty guideline for your state. Find out if you qualify by using their calculator Download the application here: Economic Hardship Deferment Request
Graduate Fellowship Deferment Program	No Limit	You must enroll in a fellowship program that: provides sufficient financial support to allow for full-time study for at least 6 months, requires a statement of objectives, requires periodic reports or projects that measure the graduate fellow’s progress You must have a Bachelor’s degree conferred by an institution of higher education You must have been accepted into said fellowship program Download the application here: Education Related Deferment Request
In-School Deferment Program	No Limit	You must be enrolled in an eligible school at least half-time Download the application here: In-School Loan Deferment Request
Internship/Residency Deferment Program	No Limit	Your internship/residency must be a supervised training program Your internship/residency must lead to a degree or certificate You must at least hold a Bachelor’s Degree before acceptance into the program You must have a deferment form signed by an authorized official of the organization from which you are taking the program Download the application here: Education Related Deferment Request
Parental Leave Deferment	6 Months	Federal PLUS Loans are not eligible You must be pregnant, caring for a newborn child, or caring for a newly adopted child You must NOT be working full-time or attending school during the deferment period You must have been enrolled in school at least half-time during the six months prior to this deferment Download the application here: Parental Leave Deferment Request
Peace Corps Deferment	36 Months	You must agree to serve in the Peace Corps for at least one year You must have your deferment form signed by a Peace Corps official Download the application here: Public Service Deferment Request
Post-Active Duty Student Deferment	13 Months	Borrowers must have completed their active duty military service, and were called to active duty at the time of, or within 6 months of, attending school at least half time You are a member of the National Guard or Armed Forces Reserve, including a member who was in a retired status when activated Download the application here: Military Service Deferment Request
Military Service Deferment	No Limit	Serving on active duty during a war or other military operation, or national emergency; or performing qualifying National Guard duty during a war or other military operation, or national emergency. Your loans must be Stafford Loans, PLUS Loans, or Consolidation Loans You must provide your loan holder with a copy of your military orders Download the application here: Military Service Deferment Request
Tax Exempt Organization Volunteer Deferment	36 Months	You must be serving full-time in an organization that has a tax exemption under Section 501(c)(3) of the Internal Revenue Code of 1986 You must assist low income people and their communities in eliminating poverty and poverty-related human, social, and environmental conditions You must not earn more than the federal minimum wage; however, you may receive fringe benefits like others in the organization You must not engage in religious instruction, proselytizing, fund-raising to support religious activities, or conduct worship services as part of your duties You must have agreed to serve in this organization for at least one year Download the application here: Public Service Deferment Request
Teacher Shortage Area Deferment	36 Months	Federal PLUS Loans are NOT eligible You must teach full-time in a public or non-profit private elementary or secondary school in a geographic region, grade level, academic, instructional, subject matter, or discipline classified shortage area, as defined by the U.S. Department of Education. Download the application here: Education Related Deferment Request
Temporary Total Disability Deferment	36 Months & Must Reapply Every 6 Months	You are, or your spouse or dependent, must be temporarily totally disabled You are unable to work and earn money or go to school for at least 60 days in order to recover from an injury or illness You are not requesting this deferment based on a condition that existed before you applied for your loan(s) You are not requesting this deferment based on an uncomplicated pregnancy (either your pregnancy, or your spouse's or dependent's uncomplicated pregnancy). If you are pregnant you may qualify for a Parental Leave Deferment You are requesting this deferment based on the disability of your spouse or dependent, and your spouse or dependent has an injury or illness that requires at least 90 days of continuous nursing or similar care from you, which prevents you from securing full-time employment of at least 30 hours per week in a position expected to last at least three months Download the application here: Temporary Total Disability Deferment
Unemployment Deferment	36 Months & Must Reapply Every 6 Months Ending for new loans after July 1, 2026	You must be diligently seeking but unable to find full-time employment in any field or at any salary or responsibility level even if you are not eligible for unemployment benefits (or if your eligibility expired) You must be registered with a public or private employment agency if there is one within 50 miles of your permanent or temporary address. If you are requesting an extension of your current unemployment deferment, and you are not providing documentation of your eligibility for unemployment benefits, you must certify that you have made at least 6 diligent attempts to find employment on the most recent 6 months Download the application here: Unemployment Deferment Request
Working Mother Deferment	12 Months	Federal PLUS Loans are NOT eligible You entered or re-entered the workforce within one year preceding this deferment request You are working full time in a position earning no more than $1 per hour above the Federal minimum wage You are the mother of a preschool-age child who has not yet enrolled in the first grade or a higher grade in elementary school Download the application here: Parental Leave Deferment Request
PLUS Borrower with Dependent Student Deferment	No Limit	You are applying to receive a deferment based on your dependent student's full-time enrollment at an eligible school Download the application here: Parent PLUS Borrower Deferment Request

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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Editor: Clint Proctor Reviewed by: Ashley Barnett

Robert Farrington

Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.

Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.

He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.