Janice Lozano
Student loan debt is a burden for many graduates, and with the average graduate of the Class of 2016 carrying $37,172 in student debt, it's no surprise that many are exploring more affordable options, such as the University of the People. The University of the People offers various student loan forgiveness programs, including federal loan forgiveness programs, and loan deferment options. Loan deferment allows students to reduce or postpone loan payments for a certain period, providing financial relief. This paragraph will explore the University of the People's loan deferment options and provide an overview of the benefits and considerations for students.
| Characteristics | Values |
|---|---|
| University of the People | A more affordable option than other universities |
| Student Loan Deferment | Allows students to stop making payments on their loans for up to three years |
| Interest Accrual | No interest accrual on federally subsidized loans; interest accrues on unsubsidized loans |
| Eligibility | Enrolled at least half-time at a qualified university, enrolled full-time, unemployed, financially troubled, a graduate in a fellowship program, a volunteer in the Peace Corps, or enrolled in the military |
| Application Process | Must apply and qualify for deferment by working with loan servicer or lender; in-school deferment is automatic |
| Alternative Options | Forbearance, income-based repayment (IBR), income-driven repayment (IDR), refinancing, restructuring payment plan |
| Student Loan Forgiveness Programs | Available for educators serving low-income families, educators at tribal colleges or universities, armed forces, firefighters, and law enforcement |
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What You'll Learn
Student loan deferment eligibility
If you are struggling to make your student loan payments, you may be able to ask your loan servicer for a deferment. A deferment allows you to temporarily pause your student loan payments. Depending on the type of loans you have, interest may also be paused while your loans are in deferment. Before asking for a deferment, it is important to consider all your options. Your loan balance can increase very quickly if interest accrues during the deferment period.
There are several eligibility criteria for student loan deferment. Firstly, you must be enrolled at a qualified university, and it does not matter if you are attending school full-time or part-time. Secondly, if you are unemployed and unable to find a job, you are eligible to apply for deferment. Other eligible categories include experiencing financial troubles, being a graduate in a fellowship program, being a volunteer in the Peace Corps, or being enrolled in the military.
It is worth noting that deferment is different from forbearance. With forbearance, the amount you owe will increase over time, whereas with deferment, it can be interest-free in some cases, such as with federal loans. While not everyone qualifies for deferment, it is generally a better option than forbearance if available. Deferment often happens automatically and is a common way for students to reduce stress while returning to school, offering a break from making payments and a chance to focus on studies.
If you are considering deferring your student loans, it is important to understand the potential impact on your loan balance and to explore all available options, such as income-driven repayment plans, which can provide flexibility in monthly payments without pausing progress toward repaying your loan.
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Interest accrual during deferment
Deferring student loans can be a great option for those returning to school, as it can reduce financial stress and allow students to focus on their studies without having to work simultaneously. While deferment can provide a much-needed break from making loan payments, it is important to understand how interest accrues during this period.
For those with a mix of subsidized and unsubsidized loans, like the example of a graduate student with both types of loans, it is important to understand that the interest accrual behaviour may differ between the two. While the subsidized loan may retain its in-school interest subsidy during deferment, the unsubsidized loan will continue to accrue interest. This can result in an increasing loan balance even during the deferment period.
It is worth noting that deferment does not mean that progress is being made in paying back loans. While it can be a helpful option for those returning to school or experiencing financial difficulties, it may provide a false belief that the loans do not need to be considered when budgeting. As such, it is important for individuals to carefully consider their options and understand the implications of deferment on their specific loan types.
In summary, while deferment can provide a temporary financial reprieve, it is important to be aware of how interest accrues during this period. The behaviour of interest accrual depends on the type of loan, with subsidized loans potentially remaining interest-free during deferment, while unsubsidized loans will continue to accrue interest. By understanding these nuances, individuals can make informed decisions about deferring their student loans.
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Loan forgiveness programs
The University of the People offers a range of student loan forgiveness programs for its students. These programs are designed to ease the burden of student loan debt, which has become a pressing issue for many.
Federal student loans can be categorised into two main types: Perkins Loans and Direct Loans/FFEL Program Loans. Each type of federal loan program has its own specific forgiveness policies and programs.
Educators
Full-time teachers working in educational service agencies serving low-income families can apply for up to 100% student loan forgiveness. This also applies to full-time teachers at tribal colleges or universities. Additionally, full-time special education teachers who have worked for five consecutive years in designated schools serving low-income families can qualify for up to $17,000 in loan forgiveness.
Public Service Employees
Borrowers with Direct Loans who work as public servants can apply for up to 100% forgiveness of their student loans after making 120 qualifying monthly payments. This includes individuals working in law enforcement, corrections, and firefighters.
Nursing and Allied Health Professions
Individuals working as full-time nurses are eligible to apply for loan forgiveness of up to 100% for their Federal Perkins Loans. Similarly, speech pathologists with a master's degree and working full-time can qualify for up to 100% loan forgiveness.
Librarians
Master's degree holders working as librarians in Title I-eligible schools or public libraries serving Title I schools can apply for up to 100% forgiveness of their Perkins Loans.
Early Childhood Education
Full-time staff members of licensed prekindergarten or child care programs can apply for loan forgiveness. This includes Head Start program employees working in the educational component, who can qualify for up to 100% loan forgiveness.
Armed Forces
Those who served in the U.S. armed forces in hostile fire or imminent danger pay areas may be eligible for student loan forgiveness. The percentage of forgiveness depends on the dates of their active service.
It is important to note that these programs may have specific eligibility requirements and application processes, so it is advisable to review the details of each program to determine your options for loan forgiveness.
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Forbearance vs. deferment
The University of People appears to allow for deferment of student loans. The university's website includes a blog post on "deferring student loans as a returning student".
Forbearance and deferment are two ways to postpone student loan payments when you can't afford them. However, there are some key differences between the two.
With forbearance, you can pause monthly payments on your federal student loans for up to 12 months. Interest continues to accrue during this time, increasing the total amount you owe. Forbearance has broader eligibility criteria and can be applied multiple times. It is generally a good option if your financial difficulties are temporary and you don't qualify for deferment.
Deferment, on the other hand, allows you to pause repayments for up to three years, depending on your circumstances. In some cases, such as with federal subsidized student loans, interest does not accrue during this period. This means the amount you owe at the end of the deferment period will be the same as when it began. Deferment is generally a better option than forbearance if you qualify, as it can save you money. However, not everyone is eligible for deferment, and it may not be a suitable long-term solution.
Both forbearance and deferment can be applied retroactively if you have missed payments but your loans have not yet defaulted. To apply for either program, you need to complete and submit a form to your student loan servicer.
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Application process
The University of the People is a tuition-free university, meaning that students do not need to take out student loans and will not have to pay back anything. However, if you are struggling with private student loan payments from a previous loan, you can explore deferment options.
To apply for a student loan deferment, you must first qualify. Qualification criteria include being enrolled at a qualified university, being enrolled in school at least half-time, serving in the military, or being unemployed. If you are unsure whether you qualify, you should contact your loan servicer or lender, who will be able to advise you on the next steps and provide you with the necessary paperwork and forms.
If you are enrolled at the University of the People, you are eligible to apply for deferment. You can apply for deferment by going to the U.S. Department of Education’s Federal Student Aid Forms website, clicking on 'Loan Deferment and Forbearance', and retrieving an application for the type of deferment you require.
If you are not eligible for deferment, you may be able to work out an alternative payment plan with your lender. Lenders are incentivized to help you find a solution, as it is in their best interest that you are able to make your payments.
If you have a federal loan, you can seek a federal loan deferral, for which interest won't accrue for borrowers with subsidized loans. If you have a Perkins Loan, you are eligible for a host of student loan forgiveness programs.
If you are unable to make your loan payments, deferment is not your only option. Forbearance is another way to put off repayments for a period of time, and many lenders offer this to borrowers who are struggling with their loans due to unforeseen circumstances. However, it is important to note that interest will still be accruing during the time of the deferment or forbearance.
If you are considering deferment, it is important to understand the potential financial implications. While deferment can provide temporary relief from loan payments, it may not be the best long-term solution. Refinancing your loan or enrolling in an income-driven repayment (IDR) plan may provide more sustainable relief.
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Frequently asked questions
Deferment can be interest-free in some cases, such as taking a federal loan. With forbearance, the amount you owe will increase over time.
If you are enrolled at a qualified university full-time or part-time, then you are eligible to apply for deferment. If you are unemployed and unable to find a job, then you are also eligible to apply.
You can explore federal loan forgiveness programs, refinancing, or an income-driven repayment (IDR) plan.
