Federal Direct student loan borrowers who are undergoing active treatment for cancer may defer repaying their Federal Direct student loans for the duration of treatment and for 6 months afterward. Interest does not accrue on any Federal Direct student loans during the active cancer treatment deferment, not even on unsubsidized Federal Direct Stafford loans.
Similar rules apply to loans made in the Federal Family Education Loan (FFEL) program.
The new deferment for active cancer treatment was included in section 309 of the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 (P.L. 115-245).
People who undergo cancer treatment have to deal with a lot of stress, and not just financial. Stress can affect cancer patient survival rates. Dealing with student loans is an additional source of stress. The reduced income during a short-term or long-term disability is often insufficient to continue making student loan payments.
Comparison of Cancer Treatment and Economic Hardship Deferments
Some borrowers undergoing cancer treatment can qualify for the economic hardship deferment, but the deferment for active cancer treatment is better.
- The deferment for active cancer treatment suspends repayment on the borrower’s Federal Direct student loans during any period in which the borrower is receiving treatment for cancer plus 6 months after the end of treatment. This contrasts with the economic hardship deferment, which is available for up to 3 years in total duration.
- The deferment for active cancer treatment waives the interest on all federal student loans, including both subsidized and unsubsidized loans. The economic hardship deferment waives the interest only on subsidized loans. Interest on unsubsidized loans continues to be the responsibility of the borrower and will be capitalized by adding it to the loan balance if the interest is not paid as it accrues.
How to Apply for the Active Cancer Treatment Deferment
Until an application form becomes available, borrowers who are undergoing cancer treatment should contact the servicer of their federal student loans and ask for the Student Loan Deferment for Active Cancer Treatment. [Editor’s note: The Cancer Treatment Deferment Form became available on August 22, 2019, 328 days or about 11 months after enactment, but this application form is not currently active since these loans qualify for the wider student loan payment pause.]
The servicer may ask the borrower to provide a letter from the borrower’s oncologist that confirms the cancer diagnosis and treatment. Doctors often provide such letters to their patients for disability and insurance purposes.
The law is effective for loans made on or after the date of enactment and for loans in repayment on the date of enactment. The date of enactment is September 28, 2018.
The law applies only to Federal Direct Loans. Borrowers with FFEL program loans may consolidate them into a Federal Direct Consolidation Loan to qualify.
Options for Deferring Private Student Loans
The deferment for active cancer treatment applies only to federal education loans. Borrowers of private student loans should contact their lender to ask about their options. Lenders may offer the borrower a forbearance that suspends all payments. Interest continues to accrue, increasing the size of the loan. Some lenders may offer a partial forbearance, where the borrower makes interest-only payments for a period of time to prevent the loan from getting larger.
Loan Repayment Options for Other Serious Illnesses
This deferment is just for cancer. It does not address other serious medical conditions.
Borrowers who are affected by other serious illnesses have several options, including the economic hardship deferment, unemployment deferment, and forbearances. These options may be limited to 3 years in total duration, but can be stacked. Interest may continue to accrue during these options.
Another option is income-driven repayment, which bases the monthly payment on a percentage of the borrower’s income, as opposed to the amount of debt. If the borrower is unemployed, the monthly payment on an income-driven repayment plan will be zero.