Grace, Deferment, and Forbearance

After graduation, you will likely have a grace period before beginning loan repayment. After your grace period is over, if you want to continue postponing payments, you can request a forbearance (or in some cases, a deferment). These options may help you get through residency without making monthly loan payments.

Grace

A 6-month grace period is applied automatically to Direct Loans at graduation. Some other loans may also have a grace period (check with the lender). During this time, 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, and unsubsidized loans continue to accrue interest because 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 another option to delay making payments on your student loans. To qualify for a deferment, strict requirements must be met. Deferments are usually granted in 12-month increments; however, you must apply AND qualify for it. Contact your loan servicer to see if you might qualify.

The most common deferments for residents are military deferments or fellowship deferments.

While in deferment, the government continues to pay interest on the subsidized loans and borrowers continue to be responsible for the interest that accrues on unsubsidized loans. 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 option to postpone payment is through a forbearance.

Forbearance

Forbearance is a time when loan payments are not required; however, both subsidized and unsubsidized loans accrue interest, and the borrower is responsible for the accrued interest. Forbearances are usually given in yearly increments.

A forbearance can be an expensive way to postpone payments because of the accrued interest; however, some residents choose to make interest payments during the forbearance, while others plan to repay their loans aggressively after residency to cut down on the extra costs accrued during the forbearance.

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 annual submission of paperwork to keep the forbearance 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 repayment. Some borrowers want their loans to be due at the same time rather than having multiple repayment 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. Private lender contact information can be found in your credit report.

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