How do student loans work if I take a gap year?

I'm worried about how my decision to take a gap year will impact my student loans. Can I defer them, and how does the process work? Are there specific rules for students who opt for a gap year?

Taking a gap year before starting college can be a great decision that lets you gain personal growth or work experience. However, it's essential to consider how this decision affects your student loans.

First off, it's important to know that federal loans will not enter repayment until after you've either graduated or cease to be enrolled at least half-time (usually considered as taking at least half of the full-time course load). So, if you've chosen to take a gap year before starting university, you won't need to worry about repayment until after you've left school.

However, if you have already started college, took out student loans, and now want to take a gap year, the situation is different. In this case, your student loans will enter repayment six months after you stop being enrolled at least half-time, because this triggers the beginning of your loan's grace period.

To avoid repayment, you could apply for deferment or forbearance during your gap year. Both these options allow you to pause or reduce your loan payments temporarily. Deferments may be available if you're experiencing financial hardship or are unemployed. Forbearance could be an option if you're facing financial challenges or high medical expenses. Still, the specifics can vary, so it would be best to consult your loan servicer for personalised advice.

For private loans, the rules can differ notably based on the lender and the specific loan agreement. Typically, private lenders are less flexible when it comes to deferment or forbearance. Consequently, if you've taken out private loans and plan to take a gap year, it's crucial to get in touch with your lender and understand the implications.

Remember, whether federal or private, interest may continue to accrue on your loans during a gap year, even if you're not making payments. It might be helpful to seek advice from a financial advisor to ensure that taking a gap year is the right decision for your overall financial situation.