Can You Defer Student Loan Payments If You Have An Internship?

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Piglet and Godzilla have a lot in common, if you consider “Mothra” to be the “student debt” of monsters. (And we do!)

Helping people understand student loans is our job at SALT™, and few are better at it than Betsy Mayotte—the director of regulatory compliance for American Student Assistance®(our parent company). We told borrowers to “Just Ask” her questions, so check out her answers below (as well as her cat—because if Piglet can’t make student loans better, what can?).

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Payment Postponements For Internships

Hello! I have a question about deferring my student loans. When I was attending my exit counseling, I did not know at the time that I would be having a yearlong internship in the Church of the Brethren Archives in Elgin, IL. My question is, since this is an internship, do I qualify for a deferment?

I’m afraid that unless you have federal student loans made prior to July 1, 1993, you would not be eligible for an internship deferment; however, there are other options.

The economic hardship deferment is something you may qualify for if your internship is full time and your earnings are less than 150% of the poverty level for your state and family size. Another option would be income-based repayment. This plan will keep your payments at no more than 15% of your income, minus an allowance for family size. You can read more about this plan here. You would apply for both of these options directly through your federal loan holders, and you’ll want to make sure you submit the necessary paperwork to all of them.

If you have private student loans, I’m afraid your options may be even more limited as many don’t offer deferments or lower payment options. You’ll need to contact your private loan holders directly to find out what your options are.

Loan Forgiveness For Social Workers

I just graduated from college with my BS in social work. I am working for the YMCA full time making $12 per hour. I work with high-risk teens in a rural community in Northern New Mexico. I have a $5,000.00 loan that I got in January 2014 to complete my education. My payments will start in 6 months; can my loan be forgiven because I work with a high-risk population? Who should I contact, and how can I receive help?

There are forgiveness programs available for the type of work you do; however, it is very likely that you will have this $5,000 loan paid off before you can take advantage of them.

This e-book from SALT™ covers all the forgiveness programs we could find—in particular, you should look at Public Service Loan Forgiveness (PSLF) and income-based repayment. Income-based repayment/Pay As You Earn will keep your payments affordable by ensuring they never go above 10% of your income. Opting for either of these plans will also help qualify you for PSLF.

Unfortunately, you need to make 120 payments to qualify for PSLF. Since you only owe $5,000, I believe you will likely pay that amount off well before you would qualify for forgiveness. Even without a payment plan, your payments would be no more than $50 per month with this balance. Considering this low balance, you may want to consider just paying it off as quickly as possible to reduce the amount of interest you will pay over time.

Have a student loan question you need an answer to? Just Ask.

(Note: The questions and answers above are real; however, they have been edited for grammar and clarity, but not by Piglet.)

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