What is Loan Deferment?
A deferment is a temporary pause to student loan payments. A deferment can be helpful for students who re-enroll in school and don’t have the income to make full monthly payments. However, borrowers should be aware of how a deferment period impacts the overall amount that needs to be repaid and the timeline for repayment.
What are the Pros and Cons of Deferment?
Cons:
- The total amount of your debt may increase. Because you are responsible for the interest that accrues during the deferment period, any accrued, unpaid interest will be capitalized (added to the principal balance of your loan) at the end of the deferment period. In effect, you are borrowing more money to cover the interest that accrued during the deferment period.
- At the end of the deferment period both your scheduled monthly payment amount and your repayment period may increase.
Pros:
- You do not have to make payments on your NC Student Assist Loan(s) during the deferment period.
- You may avoid becoming delinquent by utilizing deferment that is available to you.
How Does Loan Deferment Work for NC Assist Loans?
Deferment is only available to NC Student Assist student borrowers who re-enroll in school on at least a half-time basis at an eligible non-profit Title IV institution after having already entered the repayment period. NC Parent Assist Loans are not eligible for deferment.
Borrowers who are enrolled in school at least half time automatically receive in-school deferments. For other circumstances, borrowers can apply for a deferment period by contacting NC Assist.
When in a deferment period, you can either pause payments or pay an amount lower than the monthly minimum. Though it is not required, it is to your benefit to pay the interest that accrues during a deferment period to avoid having the interest being added to your loan amount (capitalized) at the end of the deferment, meaning that the total amount you pay over the life of your loan will be higher than it would otherwise have been if you hadn’t taken a deferment period.
How Long Is an NC Assist Deferment Period?
NC Student Assist Loan borrowers may be eligible for up to 36 months of deferment over the life of the loan while enrolled in school. After the deferment period ends, borrowers need to make payments of at least their monthly minimum amount.
What is the difference between Deferment and Forbearance for NC Assist?
Deferment and Forbearance are very similar. The difference is typically just related to the type of NC Assist loan you have and the reason for the temporary payment pause.
Deferments are available to student borrowers (and automatically granted most of the time) for re-enrollment in school after entering repayment.
Forbearances are available for student or parent borrowers who have experienced a financial hardship and require a short term payment pause to avoid delinquency or default.
You won’t need to worry too much about the differences because our NC Assist team can ensure that the right type of payment pause is applied to your loan.
How Do I Apply for Loan Deferment?
If possible, starting payments towards your student loans as soon as you possibly can is generally the best option, as it will save you money.
However, if you need to pause your loan payments, you can contact NC Assist and determine if you are eligible for a deferment period.