{"id":14048,"date":"2022-05-24T09:00:00","date_gmt":"2022-05-24T15:00:00","guid":{"rendered":"https:\/\/www.lexingtonlaw.com\/blog\/?p=14048"},"modified":"2024-05-03T10:36:07","modified_gmt":"2024-05-03T16:36:07","slug":"does-a-student-loan-deferment-or-forbearance-impact-your-credit-2","status":"publish","type":"post","link":"https:\/\/www.lexingtonlaw.com\/blog\/loans\/does-a-student-loan-deferment-or-forbearance-impact-your-credit-2.html","title":{"rendered":"How do student loan deferment and forbearance impact your credit?"},"content":{"rendered":"\n
\"Students<\/figure><\/div>\n\n\n\n
\n

Student loan deferment and forbearance are loan modification options that shouldn’t directly impact your credit, but they may have an indirect effect.<\/h2>\n<\/div>\n\n\n\n

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice.<\/em> See Lexington Law\u2019s editorial disclosure for more information.<\/em><\/a><\/p>\n\n\n\n

Considering deferring or placing your loans in forbearance due to financial struggles related to coronavirus (COVID-19)? Skip directly<\/a> to our breakdown on how the CARES Act impacts you, your student loans and your credit\u2014or read on to learn more about how pausing your student loans typically works.<\/em><\/p>\n\n\n\n

Update:<\/strong> On August 24, 2022, President Biden announced student loan forgiveness<\/a> of up to $10,000 for qualified borrowers and up to $20,000 for qualifying Pell Grant recipients. Federal student loan payments will also remain paused through December 31, 2022. Further details are to be announced in the coming weeks.<\/p>\n\n\n\n

Going to college has become increasingly more expensive over the last few decades, making more and more students reliant on student loans. In 2003, the national student loan debt balance sat at $0.33 trillion; by 2021, that number had snowballed to nearly $1.75 trillion. The average federal student loan balance is $37,014. <\/a>If you include private student loans, the average balance for an American student may be as high as $40,904.<\/p>\n\n\n\n

As the COVID-19 pandemic swept the world in 2020, many individuals were financially impacted. By September 2020, 25 percent of Americans <\/a>reported that they or someone in their household had lost their job due to the pandemic. Unsurprisingly, one in four Americans also reported having difficulties paying their bills since the pandemic, including student loans.<\/p>\n\n\n\n

The U.S. government quickly recognized the nation\u2019s need for financial help and introduced programs like stimulus paychecks, pauses on mortgage foreclosures and student loan deferment and forbearance.<\/p>\n\n\n\n

Student loan deferment and forbearance can help people who might not be able to make their payments. But especially now, many are wondering how student loan deferment and forbearance affect credit. The good news is that these options shouldn\u2019t directly impact a borrower\u2019s credit, but make sure you understand the specifics if you\u2019re considering either of these loan modifications.<\/p>\n\n\n\n

What is student loan deferment?<\/h2>\n\n\n\n

Student loan deferment is an agreement between a lender and a borrower that allows the student to reduce or pause payments for a predetermined length of time. During this time, you can defer payments of your balance, interest or both on your student loans.<\/p>\n\n\n\n

Usually, student loan deferment is challenging to get. It\u2019s saved for people who can\u2019t work, have continued additional studies or have specific types of jobs. Student loan deferment may be granted if you:<\/a><\/p>\n\n\n\n