If, like me, you are an American that made the exciting decision to get your graduate or post-graduate degree overseas, then you are probably worrying about what to do with those pesky student loans back in the U.S.
When graduating with a Bachelor's degree in the U.S., the average student has approximately $30,000 in student loan debt. I can regretfully say that I am this average American undergrad, which is part of the reason why I decided to get my graduate degree in Germany:
German universities are free (even for foreigners).
And although I was able to immediately land a part-time job in Germany, I knew this wouldn't be enough to make regular payments on my student loan in the U.S. while also paying for my rent, health insurance, and other necessities in Germany.
So, I began looking into deferment.
deferment: a period during which repayment of a loan's principal and interest is temporarily delayed
It is fairly easy to put student loans from the government into deferment for reasons such as unemployment or economic hardship. As long as you are studying at a school that is recognized by the Federal Student Aid Office, however, then you are qualified for an in-school deferment.
This type of deferment is very important because as long as your loans are subsidized by the government, then you will not collect any interest while you are studying.
How to defer your student loans while studying abroad:
- Call your student loan provider to find out if your university is eligible for in-school deferment
- Download the In-School Deferment Request
- Fill out Sections 1-3 of the In-School Deferment Request
- Find an authorized official at your university to fill out Section 4 of the In-School Deferment Request
- Send a copy of the In-School Deferment Request to your student loan providers (by mail, fax, email).
- Wait until your request is accepted.
Lucky for me, about 75% of my student loans are subsidized, so I became very excited at the possibility of not collecting interest on these loans for the next two years.
But how can you know if your school is recognized by the Federal Student Aid Office?
Good question.
I am getting my Master's from quite a small school in Germany. In trying to figure out if my school is recognized, I tried searching for it in the
FAFSA database, but my school was not in the system. In fact, there are quite a few official online databases of eligible schools, but I could never find my university.
Finally, I decided to call one of my student loan providers to ask. Amazingly, she was able to find my school within a few minutes, and said deferring would be no problem.
Once you know your school is eligible, all you need to do is provide your loan provider(s) with an "In School Deferment Request."
You can find this document here:
http://www.studentloannetwork.com/downloads/pdf/DLP_In_School_Deferment.pdf
After filling out sections 1-3 by yourself, you will have to find someone at your university to fill out Section 4.
Since foreign universities do not really understand how ridiculous the tuition/student loan situation is in the U.S., do not be surprised if the workers at your university do not really want to sign their name on this document. After being thrown around from one office to another at my university, the head secretary of my program finally agreed to do it (although she kept copies of it for my student file...).
Next, I simply scanned the forms, sent electronic copies to my student loan providers, and waited.
My first deferment was accepted within one week. The second provider rejected the request after 2 weeks. Note, the provider that rejected it was the same one that I called earlier to ensure that my school is eligible.
So, imagine my shock when I call them to ask why my request was denied and they tell me, "Your university is not eligible." I told her to look again, and after 5 minutes on hold, she told me it is eligible, and that someone must have made a mistake. This is what you get when you go to a school with a non-English character in the name (ü).
Although the whole process did take about one month, I am now in deferment until September 2016. In total, this has saved me at least $2,000, and I can still make payments on the principal whenever I want to (we'll see if that actually happens...).
If you are looking to go through the same process, I wish you luck!