Economic Hardship Deferment – All there is to Know About It

Economic Hardship Deferment: It may feel like a part-time job handling student loan payments. It can be even more overwhelming if you experience financial trouble, whether it’s because of a job layoff, care for a member of the family, or for another reason.

This can be frustrating, but it is important to realize what a toll it can take on creditworthiness as a whole. The problem could be that so many students take out multiple student loans, making these payments somewhat unreasonable (especially for recently graduated students).

Economic Hardship Deferment

The good news is that there are solutions for those facing a tough economic patch, including the Economic Hardship Deferment Programme. But even then, it can be difficult to navigate all the details you may be eligible to apply for on the basis of the reason for your difficulty and the type of student loans you have.

This article will discuss more about deferment of economic hardships, who can qualify, and how to get started with the deferment application.

What is Economic Hardship Deferment?

Deferment of economic hardship is actually postponing payments on your student loans when money is tight. The program allows for a certain amount of time for student debtors to delay interest to their loan.

Most deferments are for six to twelve months, but usually the programs allow debtors to reapply if they need even longer. This particular deferment is granted for a maximum of three years in one year increments. Generally, deferment of economic hardship is only applicable to borrowers with federal student loans.

Which Loans Qualify for Economic Hardship Deferment?

This is a federal loan program, and not all federal loans will qualify. Here are a few examples of loans that may qualify :

  • National Direct Student Loans (NDSL Loans)
  • Federal Family Education Loans (FEEL Loans)
  • Federal Stafford Loans
  • Federal Perkins Loans
  • Federal Supplemental Loans for Students (SLS Loans)
  • Federal PLUS Loans
  • Federal Consolidation Loans
  • National Defense Student Loans

Also Note:

  • The Economic Hardship Deferment program is typically available for loans  made on or after July 1, 1993.
  • Private loans taken out from a private bank or lender won’t qualify for the federally run Economic Hardship Deferment program.

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Eligibility Requirements

Not all students will qualify for a postponement of economic hardship. Until applying, there are certain eligibility criteria that each applicant must be informed of. This can avoid any down-the-road surprises, such as deferment rejection. To be eligible for a deferment for economic hardship, one of four different conditions must be met.

Deferment Has Already Been Approved Under Another Federal Student Loan Program

Deferment Has Already Been Eligible Under Another Federal Student Loan Program If you have already earned a deferment on one of your other student loans, an economic hardship deferment may be issued by default.

In most cases, they ask you to provide evidence that you have an ongoing problem, so it’s a good idea to go ahead and send it in so that they are not requesting documentation down the road.

Recipient of Some Form of Public Assistance

Economic Hardship Deferment Eligibility Requirements

Additionally, receiving public assistance from a federal or state program such as SSI (Social Security Income), food stamps, or TANF (Temporary Assistance to Needy Families) may be a justification why you would be eligible for deferment of economic hardship.

It is important at the time of application to provide documentation of receiving this assistance, otherwise, the process may be slowed down.

Peace Corp Volunteer

Peace Corp volunteers are also eligible by default for deferment of economic hardship. This can even qualify someone for a longer deferment than three years by adding proof of service dates.

Low Income Families

For deferment of economic hardship, low-income working families may also be accepted. Generally they expect you to work full time, which is at least 30 hours a week. You also have to fall below the federal poverty criteria 150 million threshold depending on where you live and the size of your family. Click on the link given to see what the standards are for your region if you are unsure of meeting these requirements.

Applying for Deferment

If you think you are meeting the eligibility requirements for a deferment of economic hardship, it may be time to apply and see if you can be accepted. The sooner you do that, the better. This is particularly true if your payments are already slipping behind.

It’s not really that hard to apply. Student debtors will first go to student to apply for an application for deferment of economic hardships.

This is the form to be completed and submitted for consideration for this type of postponement. It is important to fill it out fully and accurately after the form has been printed. This can avoid any hiccups in the process and hopefully make sure that the postponement is approved sooner rather than later.

Pros and Cons of Economic Hardship Deferment


  • For someone who is in desperate need of reprieve from their student loan payments, the program can be a godsend.
  • If your loans are subsidized, there is no cost to taking an Economic Hardship Deferment.
  • Periods of deferment are provided to borrowers who need time to find a job, increase their income, or recover from the many myriad of life events that could leave someone in a place of need.


  • With unsubsidized loans, taking a period of deferment will make the loans in question cost more over time. When the period of deferment ends, your monthly payment will likely be higher than it is now, which may be difficult for someone who is already experiencing financial hardship. Use the program if you need it, but know it can come with some costs in the long term.
  • It is also extremely difficult to qualify for Economic Hardship Deferment. The program utilizes stringent criteria to determine eligibility with income review using poverty level guidelines as noted above. This makes the program unavailable to many people who are legitimately having difficulty making their loan payments.

Staying Ahead of the Game

Economic Hardship Deferment

For student loans, keeping ahead of the game is really necessary. Students will know at times when they will be short of funds and unable to make their payments.

The best thing students can do is contact their lender and meet with them to make sure they keep their loans out of default status. Whether it is the deferment of economic hardship or another initiative that will help to alleviate some of the financial stress, never jeopardize the creditworthiness by simply waiting for it to be too late.

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