Economic Hardship Deferment: Who It's For, the 3-Year Limit, and the 2027 Change
For parents on public assistance or a small paycheck. Not a loan, not a refinance. Just how this deferment works and what it costs you.
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(877) 444-0912 →Key takeaways
- StudentAid.gov lists three ways to meet the rules: a means-tested benefit like TANF, full-time work with low monthly income, or Peace Corps service.
- It's granted up to one year at a time, with a 3-year total limit.
- Interest keeps building on unsubsidized and PLUS loans during the deferment.
- Economic hardship deferment won't be available for loans made on or after July 1, 2027.
- StudentAid.gov suggests looking at an income-driven plan first, where payments can be as low as $0.
In this article
When money is this tight, "pause your student loans" sounds like the kindest thing anyone has said all month. An economic hardship deferment can do that. It also has a clock on it, and it can cost you more than you'd think.
Here's who it's for, how the income test works, and what to weigh before you ask for one.
What an economic hardship deferment is
A defermentA period when you're allowed to stop making federal student loan payments. Interest may still build on some loans. lets you stop making payments for a while. The economic hardship version is for borrowers whose income is very low or who rely on public assistance.
StudentAid.gov lists three ways to meet the rules. You:
- receive a means-tested benefitA benefit you get because your income is low, like TANF. The federal rule also names programs like SSI and food stamps., like welfare (for example, TANF),
- work full-time but have a monthly income that isn't more than the minimum wage rate or 150% of the poverty guideline for your family size and state, whichever is greater, or
- are serving in the Peace Corps.
Under the federal rule, "full-time" means you expect to work at least 30 hours a week for at least three months in a row.
How the income test works
For the full-time work route, your monthly income is compared with two numbers, and the bigger one is your cap:
- the federal minimum wage, figured on a monthly basis, or
- 150% of the HHS poverty guideline for your family size, divided by 12.
For this deferment, the federal rule counts you, your spouse, and your children (including a baby due during the deferment) if they get more than half their support from you. Other people count only if they live with you and get more than half their support from you.
Hypothetical example (not a real borrower): a parent in one of the 48 contiguous states with a family of three. The 2026 HHS poverty guideline for three people is $27,320. 150% of that is $40,980 a year, or $3,415 a month. If that's greater than the monthly minimum wage figure, a monthly income at or under $3,415 would pass the income part of the test. Alaska and Hawaii have their own, higher guidelines.
Your servicer will ask for proof of income, so have recent pay stubs or your latest tax return ready.
Not sure a deferment is your best move?
Someone can look at your loans, your income and your family size with you and lay out the options side by side.
Call (877) 444-0912 Free review · no obligation · no upfront cost · 8am–5pm PTWhat it costs you
A deferment pauses the bill, not always the interest. StudentAid.gov says:
- You don't pay the interest on Direct Subsidized Loans, Subsidized Stafford Loans, Perkins Loans, or the subsidized part of a consolidation loan.
- You're generally responsible for the interest on Direct Unsubsidized Loans, PLUS loans, and the unsubsidized part of a consolidation loan.
Unpaid interest can be capitalizedAdded to your principal balance, so you start paying interest on it too. at the end of the deferment, which can raise the total you repay. StudentAid.gov also says that in most cases a deferment won't help you make progress toward PSLF or income-driven forgiveness.
Deferment or an income-driven plan?
StudentAid.gov suggests considering an income-driven repayment plan first. Those plans base your payment on your income and family size, and for some people the payment can be as low as $0 a month, while the months can still count toward forgiveness.
A deferment can still make sense for a short, clear rough patch. It's a pause, not a plan. Our guide on deferment vs. forbearance compares the two pause options.
The July 1, 2027 change
The One Big Beautiful Bill Act changed this deferment. StudentAid.gov says economic hardship deferments won't be available for loans made on or after July 1, 2027. The federal rule says the same for loans disbursed on or after that date. Loans you already have, made before then, keep the option, within the 3-year limit.
How to ask for it
Most deferments aren't automatic. StudentAid.gov says you fill out the Economic Hardship Deferment Request, gather proof that you meet the rules, and send both to your loan servicer.
Keep paying until your servicer tells you the deferment was granted. If you stop and it isn't granted, your loans can become delinquent and can go into default.
Why people get help with this
- Using up the 3 years. Time spent in this deferment counts against the limit, and it doesn't come back.
- Interest surprises. Unsubsidized and PLUS balances can grow during the pause.
- Stopping payments too early. Payments are due until the deferment is granted.
- Missing a better fit. An income-driven plan can give a low payment and keep forgiveness progress moving.
Want someone to handle it with you? Call (877) 444-0912.
Is a call a good fit for you?
This is most useful if…
- You have federal student loans and your income has dropped
- You're on a means-tested benefit or working full-time on a small paycheck
- You're deciding between a deferment and an income-driven plan
- You want to know how much deferment time you've already used
Probably not for you if…
- All of your loans are private
- Your payment is already affordable and your plan is working
Quick check: does a call make sense for you?
This isn't for everyone. Take 60 seconds and see if it fits your situation.
Two or more is a good sign a call is worth a few minutes.
Call (877) 444-0912Common questions
Does it cost anything to call?
No. It's a free review, with no obligation and no upfront cost.
How long can I get an economic hardship deferment?
Up to one year at a time, and no more than three years in total, under the federal rules (34 CFR 685.204). Peace Corps volunteers have a slightly different time rule.
Does interest build during an economic hardship deferment?
On some loans, yes. StudentAid.gov says you're generally responsible for interest on Direct Unsubsidized and PLUS loans. You're not responsible for it on Direct Subsidized Loans or the subsidized part of a consolidation loan.
Does economic hardship deferment count toward PSLF?
StudentAid.gov says that in most cases a deferment won't help you make progress toward PSLF or income-driven forgiveness. That's one reason it suggests looking at an income-driven plan first.
Are you the government?
No. Student Debt Mastery is a private company. We're not the U.S. Department of Education, not your loan servicer, and not affiliated with the federal government.
Want someone to handle it with you?
- You call (877) 444-0912.
A real person picks up, 8am–5pm PT. - A specialist asks about your loans and goals.
Loan types, payments, income and any notices you've received. - You hear your options and decide.
No obligation. You choose what, if anything, happens next.
Let someone handle the pause with you
One call is the easy way to get your loans, your income and your deferment time looked at, and the next steps sorted out with you.
Call (877) 444-0912 Free review · no obligation · no upfront cost · 8am–5pm PTSources (4)
- Student Loan Deferment, Federal Student Aid, U.S. Department of Education. Checked Oct 29, 2026.
- 34 CFR 685.204: Deferment, Electronic Code of Federal Regulations. Checked Oct 29, 2026.
- 2026 Poverty Guidelines, Office of the Assistant Secretary for Planning and Evaluation, HHS. Checked Oct 29, 2026.
- Income-Driven Repayment Plans, Federal Student Aid, U.S. Department of Education. Checked Oct 29, 2026.
About this guideWritten by the Student Debt Mastery Editorial Team. We update guides when federal rules change and list our sources on every article. Read our editorial policy.
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