Deferment

A deferment is a temporary period during which you are not required to make payments.  A number of deferments, which can postpone repayment of your loans, are available to borrowers with federal loans.  Deferment is often a better option for borrowers than forbearance.  During periods of qualified deferment, interest on your subsidized loans does not accrue, but unsubsidized loans continue to accrue interest.  During periods of forbearance, interest on both your subsidized and unsubsidized loans accrue thus making this the most expensive option for you as the borrower.  Eligibility requirements for qualified deferments differ based on loan type and the date the loan was originated.  Please refer to your lender, servicer, and/or promissory note to determine which deferments might be eligible for each of your existing loan(s).  Possible deferments include studying in an approved graduate fellowship program, serving in the Armed Services or Peace Corps, obtaining additional education by being enrolled at least half time, or facing a qualified economic hardship. For a more complete listing of eligible deferments, please click on your loan servicer's website or visit the Department of Education's Direct Loan website.

The grace period for each of your loans must be used before you can obtain deferments. Submit deferment forms (which can be downloaded from your loan servicers' websites) to EACH of your loan servicers about a month before the grace period ends.  Follow-up with each loan servicer to ensure your deferment status has been approved.

Education Related Deferment

1) Graduate Fellowship Deferment

If you are engaged in a full-time course of study in a qualified graduate fellowship program, you may be eligible to qualify for an education related graduate fellowship deferment.  Your fellowship program must provide financial support to allow for full-time study for at least six months.  A graduate fellowship program official must certify your deferment form indicating that you meet all the eligibility requirements.  You may download this deferment form from your loan servicer(s).  If you are applying for a graduate fellowship deferment, ensure that you send a deferment form to ALL of your loan servicers.  In addition, we suggest following up with your loan servicers to confirm that your deferment has been approved.  For more information, please contact your loan servicer and/or view the Department of Education's Direct Loan website for more details.

2) In-School Deferment

 In-school deferment allows you to temporarily suspend student loan payments while you are enrolled in an eligible school at least half-time.  If this is your first quarter of enrollment at UCSF and you have previous educational loans from undergraduate studies, you should complete an in-school deferment form (download the form from your servicer's website). After completing your information, you will need to obtain certification of enrollment from our registrar's office, and submit the in-school deferment form to all of your servicers.  Be certain to follow-up with your loan servicers to ensure that your deferment has been applied as you requested.

If you are returning to UCSF from a leave of absence after doing research, after obtaining an additional degree at another institution, or after taking time off from your curriculum, we recommend that you actively complete an in-school deferment form, and submit the completed form to all of your loan servicers (including those that service your federal and campus loans).  For campus loans, please contact UCSF Student Accounting.  For federal loans, log onto nslds.ed.gov to obtain contact information for all of your federal loan servicers.  Perkins loans' borrowers should contact the institution from where the loan was originated.  Again, it is essential that you follow-up to ensure that your loan status has been adjusted as you requested.  Please click here for a copy of the Department of Education's in-school deferment form.

Economic Hardship Deferment

Economic hardship deferment (EHD) is still available for borrowers, but the criteria used to qualify for this option changed on July 1, 2009.  If you were eligible previously, this EHD option, also known as the “20/220 rule,” allowed you to defer your federal loans, including Stafford subsidized and unsubsidized loans, federal consolidated loans, Graduate Plus loans, and Perkins loans during your residency.  Based on the newly defined criteria, most medical and dental residents' salaries exceed the maximum income allowed to qualify for an economic hardship deferment.  Qualification generally depends on borrower income, family size, and the poverty guidelines for the borrower's family size and state.  Another new requirement to be eligible is that you must be working full-time (equivalent to an annual average of 30 hours per week in a position expected to last at least three consecutive months).  Please contact your loan servicer or lender to see if you qualify for an EHD. To read more about economic hardship deferment and to determine if you might qualify, please go to Finaid.org's new economic hardship deferment calculator or review packet materials provided by Student Loan Borrower Assistance.  Economic hardship deferment is available for one year increments up to a maximum of three years.  (If you are unemployed, you should instead consider an unemployment deferment.  Contact your loan servicer for more details).

For those of you in residency, repayment alternatives to economic hardship deferment include:

1) Income-Based Repayment (IBR) Plan

IBR is a repayment plan offered in place of the economic hardship deferment option. This repayment plan is the best option for borrowers who have high educational debt to income ratios (most residents qualify). IBR will cap the amount of your monthly payment based on household income and family size. Essentially, if you qualify for a partial financial hardship (and you must re-apply every year to qualify), you will never have to pay more than 15% of your monthly discretionary income on your monthly student loan payments. The unpaid interest on your Stafford subsidized loans will also be paid by the government for the first three years that you are in IBR.

If you are interested in entering this repayment plan, contact your loan servicer(s).  If you have loans that are being serviced by more than one servicer, you must contact all servicers and notify them that you plan on applying for Income Based Repayment.  Remember, if you do not select a repayment plan, your lenders will most likely move your loans into a 10-year, standard repayment plan which can be extremely expensive during residency. For more information about IBR specifics, go to: www.ibrinfo.org and/or www.finaid.org/loans/ibr.  Other valuable resources include the Department of Education's IBR calculators and/or the Department of Educations' IBR frequently asked questions.

2) Forbearance

Forbearance is the most costly alternative available to you during your lean residency years because interest accrues on both your subsidized and unsubsidized loans. However, forbearance might be your only viable option should you wish to avoid making payments altogether during residency.  During the process of applying for forbearance, continue to make payments and do not assume forbearance has been approved until you receive written confirmation from your lender or loan servicer.

Unemployment Deferment

If you are actively seeking but unable to find employment and are registered with a public or private employment agency, you may qualify for an unemployment deferment.  Alternatively, if you are eligible for unemployment benefits, you may also be eligible for an unemployment deferment.  Contact your loan servicer and/or view the Department of Education's Direct Loan Servicing website for more details.

Military Service or Post-Active Duty Deferments

In general, military service members on active duty during a war may be eligible for a military deferment, and there is no time limit established for a military deferment.  However, some borrowers called to active duty may not be eligible.  For more information on military service and post-active duty deferments, please contact your loan servicer and/or view the Department of Education's Direct Loan Servicing website for more details. 

Grace/Deferment Chart

Important information on grace and deferments for both federal and campus loans have been compiled into a simple chart.   Whenever you are planning on deferring your loans, you must apply for your deferment with all servicers (including your campus loans whom are being serviced by UCSF Student Accounting while you are in school and ACS when you have graduated).  Because of the increased loan movement in the student loan industry, make certain that you follow up with all servicers to ensure your deferments have been applied as you requested.  In addition, when you return from taking a leave of absence and enroll in school at least half-time, fill out and have the registrar certify an in-school deferment form and send this form to all of your loan servicers (including campus loan servicers - UCSF Student Accounting).  Again, it is essential that you follow-up with all loan servicers to ensure your deferments have been applied as you requested.
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Making Payments During Deferments

Making a loan payment during a period of grace, deferment or forbearance can greatly lower the total amount you pay over the life of your loan. For loans that do not charge interest during grace or deferment, any payments you make during this period will reduce your principal balance. When interest begins to accrue, it will be based on a smaller balance, thus reducing the total interest you have to pay.
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What Happens After Deferment Ends?

Once the deferment period ends, repayment on most student loans begin. If you are a medical resident and borrowed for the first time on or after July 1, 1993,  you may obtain a medical residency forbearance as soon as your grace period ends.  Again, forbearance is the most expensive option for you and should only be elected if you cannot afford to make payments through the more affordable payment plan, Income Based Repayment.  During the process of applying for forbearance, continue to make payments and do not assume forbearance has been approved until you receive written confirmation from your lender or loan servicer. Remember that interest accrues on both your subsidized and unsubsidized loans during the forbearance period, thus increasing the total amount owed and the monthly installments once repayment begins.