<p>Is interest charged when a subsidized loan is deferred for lack of employment six months after graduation? Is it different for unsubsidized loans? How long is it deferred?</p>
<p>For Subsidized Stafford, interest starts accruing for the former student 6 months after graduation. For Unsubsidized, the interest is not deferred at all but starts accruing immediately (and adding on to the principal). It is usually a good idea to pay down the interest for Unsubsidized loans while the student is in school, if it’s possible, to keep the payments lower after graduation.</p>
<p>For a subsidized loan the interest will start being your responsibility once the grace period is over whether you have a job or not. If you are having trouble paying the loan contact the lender *before *you start being late on payments. You *may *be eligible to defer it (interest will still accrue) but you need to do this before you go into default.
[Student</a> Aid on the Web](<a href=“http://studentaid.ed.gov/PORTALSWebApp/students/english/difficulty.jsp]Student”>http://studentaid.ed.gov/PORTALSWebApp/students/english/difficulty.jsp)</p>
<p>So if I understand correctly, according to the above website - </p>
<p>You don’t have to pay interest on the loan during deferment if you have a subsidized FFEL or Direct Stafford Loan or a Federal Perkins Loan. (So if you are are unemployment and your first loan payment comes due, you may be able to defer.the payment without interest?)</p>
<p>If you have an unsubsidized FFEL or Direct Stafford Loan, you’re responsible for the interest during deferment. If you don’t pay the interest as it accrues (accumulates), it will be capitalized (added to the loan principal), and the amount you have to pay in the future will be higher. You have to apply for a deferment to your loan servicer (the organization that handles your loan), and you must continue to make payments until you’ve been notified your deferment has been granted. Otherwise, you could become delinquent or go into default.</p>
<p>Hmm - yes it Looks like for deferment the interest on a subsidized loan does not accrue. For forbearance it does. So it would depend if you are eligible for deferment or for forbearance. I did not realize that.</p>
<p>I wonder what sort of documentation/proof you have to provide to be eligible for deferment because of inability to find full time work. I had thought only being still in school or peace corps or one of the other options made one eligible for deferment.</p>
<p>I believe there is a new thing whereby students can pay back their loans based on their income. My son ( a recent grad) got some information about this. If he is unemployed, he can pay nothing on his student loans. If he is underemployed (making not much money) he pays a %age of his income…I want to say 10%. If the student’s loans are deferred in this way for 25 years, they are completely forgiven. I hope most students are not underemployed or not employed for THAT long. </p>
<p>DS was thinking about looking into this for this year, but really wants to just get the loan repayment over with ASAP. I do not think he will look for a loan repayment reduction or deferral due to his income even though he is likely eligible for one.</p>
<p>It seems like many May 2009 graduates, without a job, could fall into deferment. </p>
<p>“You can receive forbearance if you’re not eligible for a deferment. Unlike deferment, whether your loans are subsidized or unsubsidized, interest accrues, and you’re responsible for repaying it. Your loan holder can grant forbearance in intervals of up to 12 months at a time for up to 3 years. You have to apply to your loan servicer for forbearance, and you must continue to make payments until you’ve been notified your forbearance has been granted.” </p>
<p>Perhaps you have to have been making payments to go into for deferment versus preparing to make your first loan payment?!</p>
<p>I agreed with thumper1 about getting it over with ASAP.</p>