Parent PLUS Loan Deferment: A Comprehensive Guide

Introduction
The Parent PLUS Loan is a popular federal loan option for parents who want to help finance their child’s education. However, repayment can be challenging, particularly if financial circumstances change. That’s where deferment options come into play. This article provides an in-depth look at the Parent PLUS Loan deferment process, covering everything from eligibility criteria to the long-term impact on your finances.

What is Parent PLUS Loan Deferment?
Parent PLUS Loan deferment allows borrowers to temporarily postpone their loan payments under specific conditions. During the deferment period, the borrower is not required to make monthly payments. However, it's important to note that interest continues to accrue during this time, which can increase the overall loan balance if not paid during the deferment period.

Types of Deferment Available
There are several types of deferment options available for Parent PLUS Loans, each with its own eligibility criteria:

1. In-School Deferment: If the student for whom the loan was taken is enrolled at least half-time, the parent can defer payments until six months after the student graduates or drops below half-time enrollment. This is one of the most common deferment options.

2. Graduate Fellowship Deferment: If the student is participating in an approved graduate fellowship program, parents can defer their PLUS loan payments during this period.

3. Rehabilitation Training Deferment: This is available if the student is enrolled in an approved rehabilitation training program for individuals with disabilities.

4. Unemployment Deferment: Parents can defer payments if they are unemployed or unable to find full-time employment for up to three years.

5. Economic Hardship Deferment: Parents facing economic hardship may qualify for a deferment for up to three years. This could include receiving federal or state public assistance, serving in the Peace Corps, or meeting other income-based criteria.

6. Military Service and Post-Active Duty Student Deferment: If the student or the parent is called to active military duty during a war, military operation, or national emergency, deferment is available.

How to Apply for Deferment
Applying for Parent PLUS Loan deferment involves several steps:

1. Check Eligibility: Before applying, ensure you meet the specific criteria for the deferment type you are requesting.

2. Complete the Deferment Form: Obtain and fill out the appropriate deferment request form. These forms are available on the Federal Student Aid website or through your loan servicer.

3. Provide Documentation: You may need to submit additional documentation to prove your eligibility. For example, if applying for an Economic Hardship Deferment, you may need to provide proof of income or public assistance.

4. Submit the Form: Send the completed deferment request form along with any required documentation to your loan servicer. It’s crucial to continue making payments until you receive confirmation that your deferment has been approved.

5. Monitor Your Loan Status: Once your deferment is approved, stay informed about your loan status. Remember that interest continues to accrue during deferment, and you may want to consider making interest-only payments if possible.

Impact of Deferment on Your Loan
While deferment can provide temporary financial relief, it’s important to understand the long-term implications:

• Accrued Interest: As mentioned earlier, interest continues to accrue on unsubsidized loans during deferment. If unpaid, this interest will capitalize, meaning it will be added to your principal balance once the deferment period ends, potentially increasing the overall cost of the loan.

• Extended Repayment Period: Although deferment postpones payments, it also extends the loan term, meaning you’ll be paying off the loan for a longer period.

• Impact on Credit: Generally, deferment won’t negatively impact your credit score, as long as you make any required payments before the deferment is approved. However, it’s essential to stay in communication with your loan servicer to avoid any misunderstandings that could lead to missed payments or delinquencies.

Alternatives to Deferment
If you’re considering deferment, it’s also worth exploring other options that might be more beneficial in the long term:

1. Income-Driven Repayment Plans: These plans base your monthly payment on your income and family size, which could reduce your payments without needing to defer.

2. Loan Forgiveness Programs: Some borrowers might qualify for loan forgiveness programs that can eliminate some or all of their remaining loan balance after a certain period.

3. Refinancing: If you have good credit, refinancing your Parent PLUS Loan could lower your interest rate, potentially reducing your monthly payments and overall loan cost.

4. Forbearance: If you don’t qualify for deferment, you might be eligible for forbearance, which also allows you to temporarily stop or reduce your payments. However, interest will accrue during forbearance as well.

Conclusion
Parent PLUS Loan deferment can be a valuable option for parents facing temporary financial difficulties. However, it’s essential to weigh the benefits against the potential long-term costs, including accrued interest and extended repayment periods. Before making a decision, consider all your options and consult with your loan servicer to find the best solution for your financial situation.

Remember, while deferment can offer short-term relief, it’s crucial to have a plan in place for when the deferment period ends to ensure you can manage your loan payments effectively.