If you're in school, suffering from financial hardship, in the Peace Corps or on military deployment, you may be able to defer your student loans. While they'll continue to accrue interest, you won't have to make payments during the deferment period. Because no monthly payment is due, deferred student loans typically don't affect your co-signer.
Your loan co-signer is legally responsible if you don't make timely payments. If you're late on an installment your lender can contact your co-signer to seek payment from him instead of you. Your student loan also appears on your co-signer's credit report and affects his FICO score.
Deferment and Co-Signers
When you're approved for a deferment you and your lender agree to temporarily suspend your payments. Your account will appear current and won't be at risk of default. Co-signers are only responsible when accounts are not current, so yours shouldn't be affected if your loan is in deferment.
Most lenders will send a written notice of deferment once you've been approved. Your lender may also send this notice to your co-signer. Check the lender's policies on communication to determine whether your co-signer will be notified. If not, you might want to do that yourself to make sure they're in the loop.
By putting your loan into temporary deferment, you can work to improve your financial situation without the pressure of having to make payments or damaging someone's credit. However, your co-signer may not understand the deferment process or how it affects him, so he may think your deferment will have a negative impact on his finances. Contact your lender together and ask a customer service representative to explain deferment options to both of you. That should resolve any confusion and keep everyone on the same page.
Miranda Morley is an educator, business consultant and owner of a copywriting/social-media management company. Her work has been featured in the "Boston Literary Magazine," "Subversify Magazine" and "American Builder's Quarterly." Morley has a B.A. in English, political science and international relations. She is completing her M.A. in rhetoric and composition from Purdue University Calumet.