Grace, Deferment, and Forbearance

After graduation, you will likely have a grace period on your student loans, but after that time, you may want to continue to postpone payment on your student loans. Postponing payments can be accomplished by requesting a forbearance (or in some cases, a deferment). These options may help you get through residency without making monthly loan payments.

Grace

Upon graduation from medical school, a grace period is applied automatically to your Direct Subsidized and Unsubsidized Loans, in addition to various other federal loans. For Direct Subsidized and Unsubsidized Loans, grace is a 6-month period of time during which no payments are required, although you may make voluntary payments at any time.

During grace, subsidized loans remain interest free because the government continues to pay the interest; however, unsubsidized loans continue to accrue interest and the borrower is responsible for the accruing interest. Review FIRST’s Loan Repayment Timeline to determine which loans have grace periods and when repayment begins. Check with your loan servicer for specific grace period information about your individual loans. 

Deferment

After a grace period has been exhausted, then a deferment may be an option to use to delay making payments on your student loans. However, in order to qualify for a deferment, strict requirements must be met. Deferments are usually granted in 12 month increments; however, in order to be eligible for a deferment, you must apply AND qualify for it. Contact your loan servicer to see if you might qualify.

At the present time, the most common deferments for residents are military deferments or fellowship deferments.

While in deferment, subsidized loans remain interest free, because the government pays the interest on the loan. Unsubsidized loans will continue to accrue interest, and the borrower is responsible for the interest. Although monthly payments are not required during deferment, you can make voluntary payments and not jeopardize your deferment status. If you are not eligible for a deferment, the next possibility to postpone payment is through a forbearance.

Forbearance

Forbearance is a period of time when loan payments are not required, but both subsidized and unsubsidized loans accrue interest. This can be an expensive way to postpone payments on your student loans because it will likely increase your total student loan debt.

Although medical residents are eligible for a Mandatory Medical Internship/Residency Forbearance, they must apply for it and provide documents to the servicer to verify their eligibility for the forbearance. The mandatory forbearance is granted in annual increments and requires submission of paperwork on an annual basis to keep the forbearance period continuous. Without any break in the forbearance, borrowers can prevent capitalization from occurring until residency is completed.

If your loans have different repayment start dates, a forbearance can be used to help align all of your student loans so that repayment begins at the same time rather than having multiple payment dates. Forbearance provisions may vary from loan to loan, so be sure to check your promissory note, contact your loan servicer(s), and/or your financial aid office for more detailed information.

When to Contact Your Servicers

  • To apply for deferment and forbearance
  • To ask questions about your loans

Who to Contact

  • For federal loans, contact the servicer of each loan. This information can be found in NSLDS.
  • For Perkins Loans, contact your school.
  • For private or alternative loans, contact the lender or servicer. This information can be found in your credit report.

Financial Information, Resources, Services, and Tools (FIRST)

MedLoans® Organizer and Calculator (MLOC)

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The MedLoans® Organizer and Calculator was developed to assist medical students and residents with managing their education debt.

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Washington, DC 20001-2399