Terms and Definitions

Grace Period
Federal Stafford Direct Loans have a grace period of six months before you enter repayment. This grace period begins the day after you stop attending school at least half time. Your first payment will be due within 60 days from the last day of your grace period.
Note: Each loan has only one six-month grace period. If you took a break from school that was longer than six months, you already may have used the grace period on some loans.


Deferment
A deferment allows you to postpone your scheduled monthly payments if you meet specific requirements. The length of your deferment depends on the type.
Common deferments:

  • in school at least half-time
  • rehabilitation training program
  • military service
  • unemployment
  • economic hardship
Who pays the interest while you are in deferment?
  • Subsidized Stafford Loans = the Federal government
  • Unsubsidized Stafford Loans = YOU


Forbearance
If you do not meet the criteria to qualify for a deferment, you may be allowed to temporarily stop making payments with forbearance.
Your lender may grant forbearance if you:

  • are experiencing personal problems (poor health or financial hardship);
  • are affected by circumstances such as a local or national emergency, military mobilization, or natural disaster; or
  • are serving in a position that may qualify you for loan forgiveness, partial repayment of your loan, or a national service educational award.
Regardless of loan type, YOU are responsible for the interest that accrues during forbearance. You may choose to pay the interest as it accrues or allow it to capitalize (increases the total outstanding debt and can increase monthly payments).