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.
Payment Responsibilities
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.
Contacting Co-Signers
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.
Co-Signer Communication
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.
References
- CNBC: Lower Student Loan Rates Got You Thinking of Co-Signing?
- Student Loans: Cancellation, Deferment, Forbearance
- Federal Student Office of the U.S. Department of Education. "Unemployment Deferment Request," Page 3. Accessed March 19, 2020.
- Federal Student Aid Office of the U.S. Department of Education. "Get Temporary Relief." Accessed March 19, 2020.
- Federal Student Aid Office of the U.S. Department of Education. "Student Loan Deferment Allows You to Temporarily Stop Making Payments." Accessed March 19, 2020.
- Discover Bank. "What Are Student Loan Deferment and Forbearance Programs?" Accessed March 19, 2020.
- Federal Student Office of the U.S. Department of Education. "Unemployment Deferment Request," Page 2. Accessed March 19, 2020.
- Brown University. "Deferment and Forbearance." Accessed March 19, 2020.
- Federal Student Office of the U.S. Department of Education. "Unemployment Deferment Request," Page 1. Accessed March 19, 2020.
- Federal Student Aid Office of the U.S. Department of Education. "Student Loan Delinquency and Default." Accessed March 19, 2020.
- Federal Student Aid Office of the U.S. Department of Education. "If Your Federal Student Loan Payments Are High Compared to Your Income, You May Want to Repay Your Loans Under an Income-Driven Repayment Plan." Accessed March 19, 2020.
- Federal Student Aid Office of the U.S. Department of Education. "Student Loan Forbearance Allows You to Temporarily Stop Making Payments." Accessed March 19, 2020.
- Federal Student Aid Office of the U.S. Department of Education. "If You’re Totally and Permanently Disabled, You May Qualify for a Discharge of Your Federal Student Loans And/Or Teacher Education Assistance for College and Higher Education (Teach) Grant Service Obligation." Accessed March 19, 2020.
Writer Bio
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.