For borrowers who are having payment trouble, deferring student loan payments may be a necessary strategy. Although deferment only temporarily delays or reduces your payment and doesn’t lessen what you owe, it could be the right plan if those payments are severely affecting your financial stability. However, it might be wise to continue making payments if you are able to afford it. If you have a federal loan that qualifies for government relief, your entire payment would be applied to the principal loan, meaning you can pay your loan down faster.

If you can’t afford to make your payments, you still have options. Federal student loan holders can apply for forbearance, or enroll in an income-driven repayment plan based on income and family size. In some cases, an income-driven plan can move your repayment out for up to six months or more. As long as your financial hardship is a result of the COVID-19 crisis, you will not have to pay interest during your federal loan deferment, but it is best to check to make sure your hardship qualifies. Not all forbearances and deferments are the same, and each situation comes with exceptions and eligibilities.

There are two types of federal loan forbearance available to you--general and mandatory. If you’re eligible for mandatory forbearance, your request will be automatically approved. You might qualify for mandatory loan forbearance if you:

  • Serve in the AmeriCorps
  • Serve in a medical or dental internship or residency
  • Serve in the National Guard
  • Must pay 20% or more of your monthly gross income to cover monthly federal student loan payments

Alternatively, general forbearance can be granted at the discretion of your loan servicer. You might qualify for general forbearance if you:

  • Are experiencing financial difficulties
  • Have major medical expenses
  • Undergo a change of employment

Those with private student loans may also have options, including forbearance of interest and/or payments. Make sure to check with your lender what measures have been put in place to address COVID-19 related hardships and unemployment scenarios. Some private lenders offer payment reduction or other deferral plans, but practices and options vary by lender and state laws. This guide on Coronavirus and forbearance information for borrowers from the U.S. Department of Education might also help you find the right path if you are facing hardships.

In the long term, you could consider refinancing your loans with a private lender to save money. Depending on the type of student loan you have, refinancing could help you save money in overall interest payments. But make sure you consider your options carefully with a trusted financial advisor first, though. Refinancing a federal student loan can disqualify you from some forbearance and hardship programs usually in place for extraordinary events such as the current pandemic. 

First Tech is the financial partner that can help you achieve your goals. As a member-owned credit union, First Tech passes savings on to members in the form of high savings rates and low loan rates. As you’re making changes in 2020 and beyond, take a step towards being financially healthy by visiting us at, and learn more about how we invest in you.