How to Defer Student Loans in Default

#1 Student loan lawyer

Updated on November 16, 2023

The short answer is no if you’re wondering whether you can defer student loans in default. Defaulting on your federal student loan, which generally occurs after 270 days of missed payments, causes the loss of federal benefits like repayment plans, deferment, and forbearance.

But even if your loan is in default, forbearance may still be available, especially if you hold a privately-held Federal Family Education Loan or Federal Perkins Loan.

The most straightforward way to escape default status for federal student loans is through the Fresh Start Program, which is temporary and ends on September 30, 2024. Afterward, your options are the loan rehabilitation program and combining your defaulted loans into a Direct Consolidation Loan.

If you’re concerned about managing monthly payments after exiting default, know these payments are usually income-driven and based on your family size, making them generally more affordable.

For personalized advice tailored to your situation, consult your student loan servicer, the U.S. Department of Education, or book a call with our team. We’ve helped thousands of borrowers over the past decade return to good standing, qualify for loan forgiveness programs, and get affordable student loan payments while protecting their credit scores.

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Types of Deferments: Quick Reference Table

Deferment Type

Eligibility Requirements

Required Form

1. Cancer Treatment Deferment

Undergoing cancer treatment and for six months post-treatment.

Cancer Treatment Deferment Request

2. Economic Hardship Deferment

Receiving means-tested benefits, or working full-time with earnings below 150% of poverty line, or serving in the Peace Corps.

Economic Hardship Deferment Request

3. Graduate Fellowship Deferment

Enrolled in an approved graduate fellowship program.

Graduate Fellowship Deferment Request

4. In-School Deferment

Enrolled at least half-time in an eligible college or career school.

In-School Deferment Request (usually automatic)

5. Military Service and Post-Active Duty Deferment

Active duty in war, military operation, or national emergency, or completed qualifying active duty service.

Military Service and Post-Active Duty Deferment Request

6. Parent PLUS Borrower Deferment

Parent with a Direct PLUS Loan for a child enrolled at least half-time.

Parent PLUS Borrower Deferment Request

7. Rehabilitation Training Deferment

Enrolled in an approved vocational, drug abuse, mental health, or alcohol abuse rehabilitation program.

Rehabilitation Training Deferment Request

8. Unemployment Deferment

Receiving unemployment benefits or seeking and unable to find full-time employment.

Unemployment Deferment Request

Deferment vs Default Compared

While it’s impossible to defer a defaulted student loan, forbearance remains a good choice to consider. Let’s first clarify the difference between deferment and forbearance:

  • Deferment: The principal and interest payments are temporarily postponed during a deferment. You need not pay interest on some federal loans. Deferments are typically granted due to specific circumstances like unemployment, economic hardship, or active military service.

  • Forbearance: In forbearance, your monthly payments are temporarily suspended or reduced, but interest will continue to accrue on both the principal and the unpaid interest. This is generally easier to qualify for than deferment but is less beneficial eventually because of the accumulating interest.

Related: What is the Difference Between Deferment and Forbearance?

How to Move from Default to Deferment or Forbearance

If your student loan is in default, you won’t be able to transition it back to a deferment status directly. But forbearance could be an available alternative.

Contrary to common misunderstandings, the Direct and FFEL Program Loans let loan holders grant forbearance on defaulted loans. They are encouraged to do this to prevent the borrower from defaulting on a new repayment obligation or to permit the borrower to resume honoring an existing one.

The terminology might vary.

Some agencies may not offer a “forbearance” per se after default but may grant what they call a “cessation of payment” or “stopped collections.” In practical terms, these alternatives to forbearance achieve the same result—temporarily halting required payments.

To transition from default to forbearance, you must work with the Default Resolution Group or for FFEL Loans, the guaranty agency.

Discuss the possibility of forbearance and clarify any options available to you in your current situation. Each servicer may have different forms or requirements, so getting this information straight from the source is essential.

Related: Default vs Delinquency

Consequences of Defaulting on Student Loans

Defaulting on your student loan has serious implications that can affect your financial life for years. Here’s a high-level overview:

  • Immediate Loan Due: The full amount of your loan, including interest, becomes due right away.

  • Loss of Benefits: You’re no longer eligible for federal student aid like new loans and grants. You’ll also miss out on deferment and income-driven repayment plans. You’ll lose access to Public Service Loan Forgiveness and the Income-Driven Repayment Waiver. You can restore your eligibility for all those perks once your defaulted loans return to good standing.

  • Credit Damage: Your default is reported to credit agencies, affecting your credit score and future borrowing capabilities.

  • Wage Garnishment and Legal Action: Your wages could be garnished, Social Security payments and tax refunds offset, and your loan holder may take you to court, adding costs.

These consequences apply mainly to defaulted federal student loans. The main consequence of defaulting on private student loans is damage to your credit score. Unlike the federal government, Private lenders must sue you before they can garnish your wages, put a lien on your home, or take money from your bank account.

Bottom Line

As the payment pause concludes, the clock is ticking before the federal government restarts collections on defaulted federal student loans.

For personalized guidance on repayment options, contact the Education Department.

If your loans have disappeared from your credit report due to long-term default, visit to locate your loan account.

Secure your financial future by booking a call with our expert team. We’re here to tailor the best path forward specifically for you.

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Can I Apply for a Defer

If your student loan is in collections, you generally can't apply for deferment. Loans enter collections after defaulting, which eliminates options like deferment and certain repayment plans. But you might still qualify for forbearance. To regain deferment eligibility, consider loan rehabilitation or consolidation.

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