Quick overview

Returning to school while carrying student loans requires a clear repayment plan. The right approach balances short-term cash flow needs (tuition, living expenses) with long-term goals (minimizing interest, protecting eligibility for forgiveness). This article lays out practical strategies, eligibility rules, trade-offs, and an action checklist you can use today.

Why this matters

If you return to school without a plan, interest can compound, monthly payments can strain your budget, and you may unintentionally damage eligibility for loan forgiveness programs. Using the right mix of deferment, income-driven repayment (IDR), and other tools preserves financial flexibility and reduces surprise costs. In my experience working with borrowers returning to education, a proactive plan often cuts stress and total cost.

Step-by-step decision checklist (start here)

  1. Inventory your loans: federal vs private, servicer names, interest rates, balances, and loan type (Direct, FFEL, Perkins, private). Keep a single spreadsheet or use a secure loan tracker.
  2. Confirm current enrollment status with your school—half-time enrollment is commonly required for federal in-school deferment.
  3. Contact your loan servicer(s) before classes start. Ask about in-school deferment, how to certify enrollment, and how deferment affects interest on each loan.
  4. Compare short-term relief (deferment/forbearance) versus an IDR plan that sets payments by income. Use the federal estimator for IDR eligibility and payment estimates (U.S. Dept. of Education—Federal Student Aid).
  5. If you have private loans or high interest, price out refinancing only after considering consequences for forgiveness and federal protections.
  6. Re-run this checklist each year or when your income, enrollment, or family size changes.

Key strategies explained

1) In-school deferment (federal loans)

What it is: If you enroll at least half-time in an eligible program, most federal loans allow an in-school deferment that pauses required payments for the enrollment period.
Pros: Immediate payment relief and simpler budgeting.
Cons: Interest may continue to accrue on unsubsidized federal loans and all private loans; unpaid interest capitalizes (adds to principal) when deferment ends—raising long-term cost.
Action tip: If using deferment for unsubsidized loans, consider paying accrued interest while in school to avoid capitalization when repayment resumes. For details see the Department of Education’s guidance (Federal Student Aid).

2) Income-driven repayment (IDR) plans

What it is: IDR plans (REPAYE, PAYE, IBR, ICR) calculate federal loan payments based on discretionary income and family size. Payments can be as low as $0 for low-income borrowers.
Pros: Lower monthly payment, protection from default, and potential loan forgiveness after 20–25 years or earlier under programs like Public Service Loan Forgiveness (PSLF).
Cons: Lower payments can increase total interest paid over time; recertification required annually; certain types of federal loans must be consolidated to qualify for some plans.
Action tip: Before returning to school, estimate IDR payments and how enrollment affects your income calculation—see our guide on Applying for Income-Driven Repayment: Step-by-Step for Federal Borrowers.

3) Forbearance (temporary relief)

What it is: Forbearance allows temporary payment reduction or pause, granted by your servicer or lender for short-term hardship.
Pros: Quick relief when you miss a payment or encounter unexpected expenses.
Cons: Interest continues to accrue on all loan types; forbearance can increase long-term cost and should not be a routine substitute for structured plans.

4) Consolidation and refinancing

Consolidation: Federal Direct Consolidation can combine federal loans into a single Direct Loan, which may simplify payments and make you eligible for some repayment options that required consolidation.
Refinancing: Private lenders may refinance federal and private loans into a single private loan, often with a lower rate for borrowers with strong credit.
Pros: Potentially lower monthly payments or lower interest rate.
Cons: Refinancing federal loans into private loans wipes out federal protections (IDR eligibility, deferment options, PSLF eligibility). Carefully weigh this trade-off—see our article on Refinancing Student Loans: Pros, Cons, and Impact on Forgiveness.

5) Hybrid approaches and extra funding

  • Employer tuition assistance: Many employers reimburse part or all tuition; confirm tax treatment and repayment rules first.
  • Scholarships and grants: Even small awards reduce future borrowing needs.
  • Part-time work or paid internships: Stabilizes cash flow and may keep IDR payments manageable.

Eligibility details and common rules

  • Federal in-school deferment typically requires half-time enrollment in an eligible program. Your school’s registrar or financial aid office certifies enrollment to your loan servicer.
  • IDR plans require federal student loans (Direct Loans). Some legacy FFEL or Perkins loans must be consolidated into a Direct Consolidation Loan to access IDR or PSLF tracking. (U.S. Dept. of Education, Federal Student Aid)
  • Private lenders set refinancing and forbearance rules individually. Compare offers, fees, and whether a cosigner is required.

Real-world examples (illustrative)

  • A nurse returning for an advanced degree used in-school deferment on federal Direct Loans and made interest-only payments on a private loan to avoid capitalization. Result: manageable monthly outflow and smaller balance growth.
  • A teacher on a low salary enrolled in an IDR plan and continued part-time coursework; lower IDR payments preserved income for living expenses and maintained progress toward PSLF.

Pros and cons summary table

  • Deferment: +Payment pause; −Interest accrues on most loans.
  • Forbearance: +Short-term relief; −Interest accrues and can compound.
  • IDR: +Affordable monthly payment, forgiveness eligibility; −Total interest may grow, requires annual recertification.
  • Refinancing: +Lower rate for qualifying borrowers; −Lose federal benefits if you refinance federal loans.

Common mistakes borrowers make

  • Assuming deferment is interest-free—unsubsidized loans often accrue interest.
  • Automatically refinancing federal loans without checking PSLF or IDR eligibility consequences.
  • Missing IDR recertification deadlines and accidentally returning to a higher payment.
  • Not communicating with servicers—options often require paperwork.

Action plan for the next 30 days (practical)

  1. Gather loan statements and note servicers and balances.
  2. Check your school’s enrollment certification process and confirm dates when deferment can begin.
  3. Call each servicer and document the representative’s name, date, and key instructions.
  4. Run IDR payment estimates at the Federal Student Aid website and prepare income documentation if you plan to apply.
  5. If you have private loans with high rates, get at least three refinancing quotes but do not refinance federal loans if you need federal protections.

Frequently asked questions

Q: Will returning to school stop wage garnishment for student loans?
A: Enrollment may pause some administrative collections for federal loans if you qualify for in-school deferment, but it does not automatically stop wage garnishment for non-federal collections; consult your servicer.

Q: Does deferment count toward loan forgiveness timelines?
A: In most cases, time in deferment does not count toward IDR forgiveness or PSLF qualifying payments. However, certain in-school periods can be included under limited rules—check with Federal Student Aid.

Q: Can I refinance private loans while in school?
A: Yes, if you meet private lender credit and income requirements. Be prepared to show proof of income or a qualifying cosigner.

Further reading and internal resources

Authoritative sources

Professional insight and closing

In my practice advising returning students, the best results come from early planning and servicer communication. If you expect to rely on federal protections or PSLF later, avoid refinancing federal loans into private loans. If you need short-term relief and accept higher long-term cost, deferment or forbearance can be right for the moment.

Disclaimer

This article is educational and does not constitute individualized financial, tax, or legal advice. For advice tailored to your situation, consult a certified financial planner or a student loan counselor.