Yes, you can defer your federal student loans while you’re in grad school, and in most cases it happens automatically as soon as your school reports that you’re enrolled at least half-time. Deferring student loans in graduate school pauses your payment obligation on Direct Subsidized and Unsubsidized Loans, Grad PLUS Loans, Perkins Loans, and older FFEL Program loans for as long as you stay enrolled at that level. Whether you should let the pause happen is a separate question, because interest keeps growing on most grad school loans and deferred months generally don’t count toward loan forgiveness.
Who Qualifies
The requirement is enrollment at least half-time at a school that participates in federal student aid. Your graduate program defines what half-time means, usually as a minimum number of credit hours per semester. There’s no cumulative time limit, so the deferment lasts as long as you remain enrolled at that level.1Federal Student Aid. Student Loan Deferment
In-school deferment covers all federal loan types you may be carrying, including undergraduate loans. Private student loans follow their own rules; some lenders offer academic deferment, but the terms depend entirely on your loan contract, so you’ll need to contact each private lender directly.
One point for family borrowing: a Direct PLUS or Federal PLUS Loan your parent took out for you can also be deferred while you’re enrolled at least half-time, as long as the loan was first disbursed on or after July 1, 2008. The parent borrower gets a six-month post-enrollment deferment after you graduate, leave school, or drop below half-time.2Federal Student Aid. Parent PLUS Borrower Deferment Request
How the Deferment Actually Starts
Most graduate students never fill out a form. Your school reports your enrollment to the National Student Loan Data System through enrollment reporting servicers, and your loan servicer uses that data to place your loans into deferment automatically. The status usually appears in your servicer’s online portal within 30 to 60 days after the semester starts.1Federal Student Aid. Student Loan Deferment
If nothing happens, start with your school’s registrar. The school can report or correct your enrollment information. If that doesn’t resolve it, submit the In-School Deferment Request form (OMB No. 1845-0011) to your servicer. You complete your personal information and the school’s OPEID code, and an authorized school official certifies your enrollment and expected graduation date.3Federal Student Aid. In-School Deferment Request Most servicers accept the form through their online portal.
Keep Paying Until the Deferment Is Confirmed
This trips people up every semester. You’re still responsible for your regular payments until your servicer formally confirms the deferment. Stop paying before confirmation, and your account can become delinquent and your servicer may report missed payments to the credit bureaus.1Federal Student Aid. Student Loan Deferment Once the deferment is approved, payments made during the covered period are typically refunded or credited. Watch the account status, and don’t stop paying until you see it change.
What Deferment Does to Your Interest
Deferment pauses your payment, but it doesn’t necessarily pause interest. The result depends on the loan type.
Subsidized Loans
On Direct Subsidized Loans, the government covers the interest while you’re in school at least half-time, during your grace period, and during deferment. The balance stays flat.4Federal Student Aid. Subsidized and Unsubsidized Loans
The catch for grad students: Direct Subsidized Loans haven’t been available for graduate study since July 1, 2012.4Federal Student Aid. Subsidized and Unsubsidized Loans Any subsidized loans you have are left over from undergrad. Every new loan you take out for graduate school will be unsubsidized or a Grad PLUS Loan.
Unsubsidized and Grad PLUS Loans
Interest accrues every day on these loans, in school or not. The daily charge is your current principal multiplied by the interest rate, divided by 365.25. A $50,000 unsubsidized loan at 7% runs about $9.58 per day, or roughly $3,500 per year.4Federal Student Aid. Subsidized and Unsubsidized Loans
You can pay interest as it accrues even while deferred. If you don’t, unpaid interest eventually gets added to your principal through capitalization, and from then on you pay interest on the larger balance.
Capitalization at the End of Deferment
Regulations changed in July 2023 to remove several capitalization triggers, but the law still requires capitalization in two situations: when you exit a deferment period and when you leave the Income-Based Repayment plan.5U.S. Department of Education. Eliminate Interest Capitalization When your in-school deferment ends, all the interest that piled up gets added to your principal. Over a two- or three-year graduate program, that can add thousands of dollars to total repayment. Even small voluntary interest payments during school prevent that hit.
When Deferring Is the Wrong Call
Automatic deferment is the easy path, but two situations make it worth opting out.
You’re Pursuing Public Service Loan Forgiveness
Months in in-school deferment generally don’t count toward the 120 qualifying payments PSLF requires. Qualifying payments have to come under a qualifying repayment plan, which means either an income-driven plan or the standard 10-year plan.6Federal Student Aid. What Repayment Plans Qualify for Public Service Loan Forgiveness (PSLF)? If you’re working full-time for a qualifying employer while attending grad school part-time, every month you spend in deferment is a month of PSLF credit you’re giving up. An income-driven plan may calculate a $0 payment at low income, and that $0 payment still counts.
Your Income Qualifies You for a $0 IDR Payment
Income-driven repayment plans set payments based on income and family size. Grad students without full-time income often qualify for $0 or near-zero payments. The practical difference between a $0 IDR payment and deferment is that IDR months count toward eventual forgiveness, through PSLF at 10 years or standard IDR forgiveness at 20 to 25 years, while deferment months typically don’t. The IDR landscape has been in flux due to ongoing litigation around the SAVE plan, so ask your servicer which IDR plans are currently accepting new enrollments.
What Happens When You Finish School
Deferment ends when you graduate, leave school, or drop below half-time. Direct Subsidized and Unsubsidized Loans then enter a six-month grace period before payments begin. Grad PLUS Loans carry an automatic six-month post-enrollment deferment that works the same way.7Federal Student Aid. Student Loan Repayment
Your servicer sends a repayment schedule before the grace period ends with your first payment date, monthly amount, and total number of payments. This is the point where unpaid interest on unsubsidized and Grad PLUS loans capitalizes, so your payment reflects the larger balance.5U.S. Department of Education. Eliminate Interest Capitalization If the standard 10-year payment is more than you can manage, you can switch to an income-driven plan before the first payment comes due.
Interest Paid During Deferment Is Deductible
If you do make voluntary interest payments while your loans are deferred, that interest is tax-deductible. You can deduct up to $2,500 per year in student loan interest, whether or not you itemize.8Internal Revenue Service. Topic No. 456, Student Loan Interest Deduction The deduction phases out at higher incomes. For 2025, the phase-out begins at $85,000 for single filers and $170,000 for joint filers, with the thresholds adjusted annually for inflation.9Internal Revenue Service. Publication 970 (2025), Tax Benefits for Education Most grad students earning modest incomes land well inside the eligible range, which makes voluntary interest payments a bit cheaper after the tax benefit than they look on paper.