Should You Choose Deferment or Income-Based Repayment?

Are you finding it more difficult to pay your student loans during these tough economic times? If you are considering taking advantage of an Economic Hardship Deferment or Income-Based Repayment, use this comparison chart to determine which option is the right fit for you.


Income-Based Repayment

Economic Hardship Deferment

Plan Description Income-Based Repayment (IBR) adjusts a qualifying borrower's monthly payment based on their income. Economic Hardship Deferment postpones monthly payments for qualifying borrowers.
Qualifying borrowers will make lower payments for one year. Qualifying borrowers will have their monthly payments postponed for up to one year.
Borrowers whose income is low enough may make $0 payments under IBR.
Borrowers can continuously re-apply and qualify for IBR until their federal student loans are paid in full or they qualify for loan forgiveness. Borrowers are permitted a maximum of 3 years of Economic Hardship Deferment.
After a borrower initially qualifies for IBR, the federal government will pay the unpaid interest on subsidized loans for up to 3 consecutive years. During Economic Hardship Deferment, the federal government will pay the interest on subsidized loans.
After receiving 300 "qualifying payments" and the passage of 25 years, loans that participate in the IBR plan will have the remaining balance forgiven.  
Eligible Borrowers Borrowers whose federal student loan payments exceed 15% of his/her household discretionary income. Borrowers whose earning is less than the minimum wage or 150% of the poverty level. Borrowers must be employed full time.

- OR -

Borrowers who are receiving payment under a federal or state public assistance program such as Food Stamps.
Eligible Loans Federal Stafford Federal Stafford
Federal Grad PLUS Federal Grad PLUS
Federal Consolidated (except for consolidated loans that repaid a Parent PLUS loan) Federal Consolidated
  Federal Parent PLUS

Learn More about Income-Based Repayment

Learn More about Economic Hardship Deferments