If you are having a hard time making monthly payments on student loans, you might consider requesting a deferral. Typically, your lender will grant you a deferral if you are able to demonstrate financial hardship.
Deferral can offer some immediate help with debt and enable you to manage your budget better, but there may be drawbacks. Here are some things that you should consider before reaching out to your lender for a deferral.
Deferral is preferable to defaulting
If you know that you are going to be unable to make payments in accordance with your repayment schedule, you may have no choice but to request a deferral. This option is far better than simply ignoring your billing statements. A loan that you defer will not harm to your credit score, but a delinquent line item on your credit score may lower it significantly.
Interest will continue to accrue
You may be able to defer loans for as long as three years. However, it is important to bear in mind that unsubsidized loans will still accrue interest during this time. You will ultimately end up accruing more interest if you take longer to pay your loans. Permission to defer may be a quick fix to a budgeting problem, but it will cost you more money in the long run.
Ultimately, you should give serious thought to the short-term and long-term effects of student loan deferral. Consolidation or refinancing may be a good alternative that can help make repaying your debt more manageable.