The option to defer federal student loans may feel like a safety net — even if you've never done it, you like the idea that you could if you needed to. Maybe that notion has even stopped you from refinancing to a lower interest rate with a private lender. That means you mean be paying more than you need to for a benefit that you may or may not use.
So can you defer private student loans if you decide to refinance? The short answer: No, you can't defer private student loans in the traditional sense. But the long answer is much more nuanced. Many private lenders offer some form of assistance if you experience an economic hardship.
Some private lenders even provide special programs to help borrowers who are in financial distress. That means that refinancing with a private lender doesn't mean you'll be out of luck if you find yourself in a difficult financial situation.
We reached out to some of the most reputable private lenders we know to find out what they offer.
CommonBond has one of the most generous policies out there for borrowers dealing with economic hardship. You can apply for three months of hardship forbearance at a time — with up to 24 months of forbearance over the life of the loan.
To apply, you'll need to show that you're experiencing a prolonged financial difficulty, such as a loss of income. You may also be able to apply for something CommonBond calls "administrative forbearance" in certain instances, like if you've declared bankruptcy or are entering active military duty.
CommonBond is also one of the only lenders to offer academic deferment if you're going back to school. They'll provide 32 months of deferment plus a six month grace period after you graduate.
Earnest provides an innovative program that allows you to skip a single payment without the commitment to a full forbearance period. Once you've made full, on-time payments for six consecutive months, you can skip one payment every 12 months. All you have to do is fill out the Skip-A-Payment request form.
That payment will get added onto your loan term, so if you had 36 payments left, you'll now have 37 payments left, but that might be a trade-off you're willing to make if the other option is to be delinquent on your loan.
Earnest also provides traditional hardship forbearance for three months at a time, for a total of 12 months over the course of your loan. To qualify for forbearance, you'll have to show that you've had an involuntary decrease in your income or employment or that you've had a significant increase in essential costs, such as medical expenses or an emergency repair to your home.
To apply for forbearance, contact Earnest's Client Happiness Team.
Learn more about refinancing with Earnest.
3. Education Loan Finance
A division of SouthEast Bank, ELFI may grant forbearance for up to 12 months total over the course of the loan if you're experiencing economic hardship because of something out of your control, such as losing your job or becoming disabled.
The forbearance is granted on a case-by-case basis at the discretion of SouthEast Bank and may not cover things like maternity leave.
If you want to apply for forbearance, call ELFI's customer service line.
Learn more about refinancing with ELFI.
4. Laurel Road
If you're a borrower with Laurel Road and you hit a rough patch, you may have access to loan forbearance for three months at a time (with 12-month cap over the life of the loan). The lender requires that you show a qualifying economic hardship. Examples include things like involuntary job loss or unpaid maternity leave.
Laurel Road also provides loan forgiveness in the event of death or permanent disability. Forgiveness for disability requires proof of significant unanticipated permanent reduction in income.
To access either option, contact Laurel Road to speak with a customer service representative.
Learn more about refinancing with Laurel Road.
LendKey doesn't provide loans directly, but it does match borrowers up with credit unions in their area who do. LendKey then maintains, regulates, and services those loans — and most of their partner lenders provide some level of forbearance for financial hardship.
The length of forbearance is dependent on the length of the loan term. For instance, a borrower with a 15-year term is eligible for a total of 18 months of forbearance, and a borrower with a 10-year term is eligible for a total of 12 months of forbearance.
Lendkey is also one of the few private lending options that provides forbearance if you choose to go back to school. Contact the LendKey servicing team to determine your options.
Learn more about refinancing through LendKey.
SoFi does not technically offer forbearance or deferment. However, they do provide a generous Unemployment Protection Program. Through that program, a borrower who loses their job through no fault of their own can postpone their payments for three months at a time (12 months total over the life of the loan).
There is a catch, that's actually a benefit to you: While you're in the program, you have to work with SoFi's Career Team to find new employment.
The program works like federal forbearance in that it does not extend your loan term, but your loan does continue to accrue interest unless you choose to make interest-only payments.
If you currently have a loan with SoFi and have lost your job, you can apply for the Unemployment Protection Program online.
Learn more about refinancing with SoFi.
7. Splash Financial
Splash Financial does not provide any forbearance or deferment programs. However, they encourage you to contact them right away if you experience an economic hardship. Options to provide assistance are handled on an individual case-by-case basis, so do not be afraid to get in touch.
Learn more about refinancing with Splash Financial.
Other things to know
Remember: deferment and forbearance aren't get-out-of-jail-free cards. In most cases, you will accrue interest that will capitalize at the end of the period. That means the principal on your loan balance will increase and your payments are likely to be higher when you're out of your nonpayment period.
While refinancing your federal student loans with a private lender may involve losing some federal benefits, many private lenders still provide a safety net for borrowers who are struggling financially. And the reduced interest rates and lower monthly payments that come with refinancing your student loans could mean that you're less likely to have financial difficulties in the first place.
Use this refinancing calculator to see how much you could save.