Dealing with law school debt can feel overwhelming. And no wonder: According to the Education Data Initiative, the average law school graduate owes $160,000 in student loan debt. If you’re struggling to pay off your law school loans as you’re working to get ahead in your legal career, there are ways to help manage your debt. Student loan deferment, which allows you to stop paying back a loan temporarily, is one option to consider.
Deferment is similar to student loan forbearance, which also allows you to postpone or reduce payments on your federal loans. However, with forbearance, interest accrues on the loans, and you typically end up paying more overall. Forbearance is also for a shorter period than deferment.
Read on to learn how student loan deferment works and discover other options that could help with law school loan repayment.
Student loan deferment allows qualified applicants to reduce or stop making payments on their law school loans for up to three years.
For law school grads with subsidized federal student loans—such as Direct Subsidized Loans and the subsidized portions of Direct Consolidation Loans—no interest will accrue on the loans during deferment. (In comparison, forbearance interest accrues on all types of Direct Loans.)
However, if you have unsubsidized federal student loans—including Direct PLUS loans—interest will accrue and be added to the loan amount when your deferment period ends. You can pay the interest as it accrues during deferment or allow it to accrue and be added to your loan principal balance at the end of your deferment. Be aware that if you decide to let the accrued interest be added to your balance, your loan amount may grow significantly higher.
Lawyers with private student loans may not have the option for deferment, although some private lenders do offer it. If you have questions about whether you can defer your private law school loans, contact your lender directly.
Law school graduates with federal student loans will need to apply for deferment. To do this, you typically submit a request to your loan servicer. You will likely be asked to send documentation to prove you meet the eligibility requirements.
For lawyers who are back in school at least half time—say, to get an MBA or a teaching degree—deferment is usually automatic as long as they’re in a qualifying program at an eligible school.
If you used a private lender for your law school loans and the lender offers deferment, they’ll require you to fill out their own forms and meet specific requirements.
Deferring law school loans and putting them on a temporary pause can help if you’re having trouble repaying them. For instance, maybe you’re not making enough money at this point in your legal career to afford loan payments plus rent and other living expenses. Taking a deferment can give you up to three years to gain your financial footing.
Not only that, deferring your law school loans doesn’t directly impact your credit score. And if you have subsidized federal loans that don’t accrue interest, deferment won’t make your loans any more expensive when you start repaying them again.
If you have an unsubsidized federal student loan that’s subject to interest accrual, deferment may not be the best option for you. That’s because you might pay significantly more over time as the student loan interest capitalizes.
While student loan deferment can benefit law school grads struggling to make their loan payments, there are also some drawbacks to consider.
The most obvious advantage of student loan deferment is that you can take time off from making student loan payments. Plus, you can defer your student loan payments for up to three years.
The major downside of student loan deferment is that interest can continue to accrue, depending on the type of loans you have. That can significantly increase what you owe over the life of the loans.
Deferment isn’t one-size-fits-all. There are several different kinds of federal student loan deferment lawyers can apply for, including:
Those participating in a law graduate fellowship may be eligible for this type of deferment, which offers financial support to pursue legal graduate studies and research.
Lawyers can get deferment if they are enrolled at least half-time at an eligible college to pursue another degree, such as an MBA. Graduate or law students who get a Direct PLUS Loan can qualify for six months of in-school deferment after they stop attending school at least half-time.
When you’re in school, your college should automatically place your federal loans into deferment. If they don’t, reach out to ask for deferment. You may also need to fill out the in-school deferment request from the Federal Student Aid Office.
If you can’t find full-time work as a lawyer or you're receiving unemployment benefits after losing a job in the legal field, you may be eligible for unemployment deferment.
Those who work full-time in the legal profession and have a monthly income below the minimum wage rate or 150 percent of the poverty guideline for their family size and state may qualify. For instance, you might be a public defender or have a small, lower-paying law practice, which could make you eligible.
For this type of deferment, you need to be a law school grad doing active duty military service or within 13 months of active duty service.
If you're undergoing cancer treatment, you may be able to get this deferment. It also applies to the six-month period after treatment ends.
Law school grads in rehabilitation treatment for vocational, drug abuse, mental health, or alcohol abuse may be eligible.
If you simply stop paying your loans as outlined in your student loan contract, you risk defaulting on your student loans. The consequences of default for federal student loans may include immediately owing the entire balance of the loan, damage to your credit score, garnishment of your wages, withholding of federal benefits and tax funds, and being taken to court.
Consequences of defaulting on private student loans vary by lender but may be similar to those outlined above. Additional repercussions might include being pursued by debt collectors and having collection charges added to what you already owe.
You may qualify for student loan deferment if you fall into one of these categories:
Private lenders are not required to offer deferment options, but some do. Ask your lender what options are available to you if you lose your job, experience financial hardship, incur high medical expenses, go back to school to pursue an additional degree, or start a legal internship, clerkship, or fellowship.
If you can get a private law school loan deferment, be aware that the balance will likely accrue interest on the loans. Still, it's better to defer your loans than stop paying them, which could put you into student loan default.
While deferment can help by giving you some extra time to work on repaying your federal law school loans, it’s only a temporary solution. Eventually, you will need to resume making payments again.
Federal student loan borrowers who qualify for financial or hardship deferment can defer their loans for up to three years. Lawyers with private loans may not have an option to defer them at all. Even if they do, the deferment period may be only one year.
Deferment isn’t the only help out there for law school grads. Lawyers may qualify for several federal and state programs to help with law school loan repayment. Here are some to look into:
Depending on their circumstances, some law school grads might want to think about student loan refinancing. With refinancing, borrowers take out a new loan with a private lender and use it to pay off their existing loans. Those who qualify may get a lower interest rate on the loan or a longer repayment term that could reduce their monthly payments. However, a longer repayment term, while possibly lowering monthly payments, generally results in paying more interest over the life of the loan.
Refinancing law school loans might be a helpful option for lawyers with strong credit and a solid income. But it’s important to note that refinancing federal loans with a private lender makes the loans ineligible for federal protections, repayment programs, and forgiveness. So, if you are planning to access any of these, refinancing likely wouldn’t be the right choice for you.
Student loan deferment can help you pause your law school loan repayments if you are struggling financially. Deferment stops your payments for up to three years. However, deferment does have some disadvantages, including the possible accrual of interest on the loans, which means you could end up paying significantly more over the long term.
Carefully consider the pros and cons of student loan deferment to evaluate whether it makes sense for you. Also, investigate other options for financial assistance, including Public Service Loan Forgiveness, income-driven repayment plans, and repayment programs offered by your state or law school or the federal government. If you don’t need access to federal programs and protections, you might want to consider law school loan refinancing.
By casting a wide net and exploring all avenues for assistance with your law school loans, you can choose the program that best fits your needs, improves your financial situation, and allows you to concentrate on what those loans were about in the first place: your legal career.
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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