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It’s your turn at the supermarket checkout. You insert your card into the reader, chip-side first, like you always do. And you get a “card declined” message.

A credit card malfunction can be a small embarrassment and disruption in your day-to-day life. But if your credit card chip stops working, don’t panic. There are several reasons why it might be malfunctioning, including wear and tear, dirt buildup, or an issue with your account.

Let’s dig into the basics of credit card chips, the different reasons a credit card chip might stop working, and what to do if it malfunctions.


💡 Quick Tip: If you have a good credit score, you can apply for a credit card from SoFi without a security deposit.

What Is a Credit Card Chip?

A credit card chip is a microchip that’s embedded in your credit card. The chip protects your data when you make an in-person payment. It uses a process called tokenization that encrypts your information, and generates a one-time code for each transaction.

Thanks to this technology, your credit card information is never received or transmitted by the merchant. This lowers the instances of credit card fraud when you use your card in a store or restaurant.

How a credit card chip works

This technology is also known as “card-and-PIN,” “card-and-signature,” or EMV (aka Europay, MasterCard, and Visa). The microchip that’s embedded in your card uses a process called tokenization. This is the same technology used in contactless credit cards and payments. In short, tokenization takes your sensitive card information and converts it into a unique token. This token protects your card info and account details.

The credit card chip holds encrypted data and transaction codes. These transaction codes are unique, one-time use, and always changing. As a result, it’s hard for counterfeit thieves to duplicate the data that’s stored on the chip.

Credit card chip types

Within the realm of credit cards, there are three main chip types:

Standard “smart cards:” If you want to make an in-person purchase or take out cash at an ATM, many “smart cards” with the EMV chip technology simply require you to insert or “dip” your card into the card terminal.

Chip-and-PIN cards: This type of credit credit chip offers the most security. To make a purchase or make a withdrawal from an ATM with a chip-and-PIN card, you’ll need to first “dip” your card into the card reader, then punch in your credit card PIN code.

Chip-and-signature cards: This type of chip card provides a bit more security than if you simply swiped your card, but it’s not as secure as the chip-and-PIN type card. As the name implies, to use your card, you insert your card into the reader, then provide a signature for the transaction to go through.

Chip-and-signature cards aren’t as secure as their chip-and-PIN counterparts because it’s easier for fraudsters to forge a signature than to decipher your 4-digit PIN.

5 Things That Can Cause a Credit Card Chip to Stop Working

Here are some reasons why your credit card stopped working, and how to avoid these hiccups from happening:

Grime buildup

Your card encounters dirt each time you insert or swipe in a machine, and grime will build up over time. This grime buildup could mean the terminal can’t read your card. To avoid this from happening, wipe down your card periodically.

Wear and tear

Over time, the chip can get scratched or damaged. While scratches to the plastic on your card won’t cause any issues, scratches or dings to the chip might cause your chip to stop working and the transaction won’t go through.

To prevent wear and tear, consider protecting your physical card with a protective sleeve holder. These are usually made of a thin yet durable material, like synthetic fibers.

Heat or water damage

If you accidentally spill coffee and your credit card gets doused in the hot liquid, or you leave your card in the hot car in the middle of summer, the chip on your card might get warped and go on the fritz.

To avoid this from happening, keep your card in your wallet when not in use. And be mindful of exposing it to extreme heat.

Recommended: All You Need to Know About Credit Card Numbers

Issue with the card reader

Your card might not be the problem at all. Sometimes the issue might have to do with the card reader, also known as the terminal, which acts as the middle man between the retailer and the bank, and authorizes and processes your payment. If there’s a technical glitch with the terminal, your chip might not work.

In this case, try swiping your card instead of doing the chip-and-PIN route. Hopefully that will resolve the issue and your payment will go through.

Issue with your account

Sometimes when your chip stops working it’s because there’s an issue with your account. Common reasons include going over your credit limit, the billing info doesn’t match with your account, or you’re making purchases in locations where you don’t normally shop.

To steer clear of this potential issue, watch your credit limit. You can log on to your account or check your card balance on your card’s mobile app. If you’re using your card while on a business trip or vacation, set a vacation alert.


💡 Quick Tip: When using your credit card, make sure you’re spending within your means. Ideally, you won’t charge more to your card in any given month than you can afford to pay off that month.

What to Do if Your Credit Card Chip Stops Working

Here’s how to fix your credit card’s chip if it’s not working:

Clean the card

If your chip is malfunctioning because of dirt buildup, try to clean your card. Gently wipe it down with an antibacterial wipe, alcohol pad, or microfiber cloth. You can also gently wipe around the edges of your chip with a cotton swab.

Swipe instead

The magnetic stripe on your card also contains your account data. If the problem is with the checkout terminal, try swiping instead of dipping your card. There’s a chance that your transaction will go through without a hitch.

Get a replacement card

If the chip on your card regularly doesn’t work and no amount of cleaning fixes the problem, you might need to reach out to your credit card issuer and ask for a new one. You can do so by calling the number on the back of your card or on the issuer’s website or app. You can sometimes request a new card directly on the app or issuer’s website.

How long it will take for you to receive a replacement card depends on the credit card issuer, but you can expect it to take anywhere from one to seven business days. There might be a charge for a replacement card and a charge if you want shipment to be expedited.

The Takeaway

There are a handful of reasons why your credit card chip stopped working. By doing a bit of investigating, you can get to the root of the issue and troubleshoot accordingly. Most likely you’ll just need to wipe down the card, but sometimes you may need to request a new one.

Looking for a new credit card? Consider a rewards card that can make your money work for you. With the SoFi Credit Card, you earn cash-back rewards on all eligible purchases. You can then use those rewards for travel or to invest, save, or pay down eligible SoFi debt.

FAQ

What do you do if your credit card chip doesn’t work?

If your credit card chip isn’t working, don’t get frustrated. There’s usually a simple explanation why. It could be the result of normal wear-and-tear, heat or water damage, or grime buildup. Or it could be an issue with the card terminal or your account.

Try to clean your card to see if that helps. If you’re in the middle of a purchase, swipe your card instead of inserting it into the terminal. In some instances, you might need to replace your credit card.

What can ruin a chip in a credit card?

There are a few ways a credit card chip can get ruined: regular wear and tear, grime buildup, or extreme heat or water damage.

Can you still use your card if the chip is broken?

You can still use your card by swiping. However, swiping your card instead of going the “chip-and-PIN” or “chip-and-signature” route reduces its security.

Photo credit: iStock/Juanmonino

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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Declaring a major in college isn’t a minor decision, but that doesn’t mean you can’t change your mind at some point down the road. Indeed, roughly one-third of undergraduates actually change majors at some point during their college careers, and around 10% change majors more than once.

While the decision to change your major can be stressful, actually making the switch doesn’t have to be. The key to a smooth transition is to do some strategic planning and to keep up communications with the university.

Read on to learn how to learn more about how to change your major.

First, Declaring a Major

Many colleges and universities ask undeclared students to choose a major by the end of their sophomore year. That’s because many students spend the first year or two taking general education classes.

Once a student is ready to declare a major, the official process will vary school by school. Generally, a student will need to schedule a meeting with their assigned academic advisor, and might need to meet with a department advisor for their chosen major.

In a department or advisor meeting, students will review their academic progress and roughly outline the rest of the required courses they need in order to complete their major.

These courses and their timing aren’t set in stone, but it can help give students an idea of how heavy their course load will be until graduation, and set expectations for how long it’ll take them to complete the degree.

From there, the request to declare a major needs to be approved by that specific department or college. That might be as informal as a meeting or as formal as an application.


💡 Quick Tip: Pay down your student loans faster with SoFi reward points you earn along the way.

Possible Reasons to Change a Major

Deciding to change majors is a personal choice. There’s no one sign for all students. In fact, a combination of factors may inspire a switch.

While not an exhaustive list, here are a few reasons a student might feel it’s a good idea to change majors:

•  More excitement about a different area of study: Maybe a computer science student is more excited by a single art history elective than anything else on their schedule. If they dread every class but the elective, it might be time to change majors. Of course, a major isn’t only about passion for the subject, but that does come into play. When nearly every class is boring, it might be time for a change.

•  Poor grades: College courses should be challenging, but if a student is regularly failing, or just barely passing required courses, it might be time to consider a different major. Not only does it indicate that the area of study might be outside someone’s talents, but bad grades can also jeopardize graduation and completing the degree on time. If a student is giving a course her all and still coming up short, it might be time to consider alternatives.

•  Really, really good grades: This might sound counterintuitive, but if courses aren’t challenging, then the major might not be the best fit. If a student feels bored in class but continues to ace the coursework, it might be a good idea to look at other majors or consider a double major or minor.

•  Money: Selecting a major is often the delicate balance between something loved and something that leads to a career post-graduation. Picking a major solely because it could mean big bucks after college could lead to regrets down the line. Remember that post-grad life should feel fulfilling, too.

•  An awful internship: Now this can be a little tricky. If students end up hating a summer internship related to their major, they should try to evaluate if it was the work or the management that they disliked. It might have been a poor fit culture wise but a good fit workwise.

If any or all of the above sound familiar, it might be time to think about changing majors. Additionally, it might just be helpful along the way to evaluate satisfaction with a major, even if you decide to continue in that area of study.

Recommended: Credit Hours: What Are They & What You Need to Know

Considerations Before Changing a Major

If it feels like it may be time to change majors, here are a few considerations to keep in mind before crossing the t’s and dotting the i’s:

•  What courses transfer? If the desired new major is far outside the current area of study, a student might have to basically restart college. For example, a psychology major who changes tack to engineering might not have much overlap on core curriculum. Just like mapping out courses when declaring a major the first time, students should consider doing the same before changing majors. It can show how much work or courses will be required.

•  Will it cost more? Depending on school pricing or area of study, changing majors might end up costing a student more in the long run. That could be from additional course fees or taking more classes to catch up over the summer. Once the course load is mapped out for a major change, crunching the numbers is a good idea.

💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.

•  Will it take longer? It may not be possible to graduate in four years if the new major is vastly different or the change comes late in an academic career. More time at school could mean more taking out more student loans. (Then again, less than half of bachelor’s degree earners graduate within four years.)

•  Will it line up with post-graduate goals? It’s important to enjoy an area of study, but it’s also important to ensure it aligns with jobs a student wants after graduating. If a premed student switches to international relations but hates the job prospects, that might be a poor choice.

Time, money, or heavy course loads don’t have to squelch a change in major, but they should be factors a student is aware of before making the switch.

How to Change a Major

The reality is, deciding to change majors is likely harder than the actual process of doing so. Changing majors won’t be so different than declaring a major in the first place.

First, a student should schedule a meeting with their current academic advisor to talk through the choice. The advisor may be able to offer insight or even provide course recommendations in the new major.

Typically, the student is required to fill out a short form and have their current as well as new academic advisor sign it to make the major change official.

Depending on the college or area of study, a student might have to apply to the specialty school on campus they wish to transfer to as well.

Recommended: 20 of the Most Popular College Majors

The Takeaway

How to change your major? It requires thought and a talk with your academic advisor. Changing majors can alter a lot about the college experience, from course load to post-grad plans. It can also impact how many years you’ll spend in school and the total cost of your education.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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With mass student loan forgiveness blocked by the Supreme Court, you may be curious about what other relief options are available, especially if you work (or plan to work) in a field that requires graduate school — and significant student debt — but may not pay a high salary.

The good news is that there are multiple programs that offer student loan forgiveness or relief for mental health professionals, including counselors and therapists. Forgiveness programs for mental health professionals are designed to encourage individuals to enter and stay in the profession.

Read on to learn about programs and strategies that can help you repay any student loans you have taken out (or plan to take out) to become a mental health professional.

How to Plan for the Future With Student Loan Debt as a Mental Health Professional

Whether you take out private student loans or federal student loans to pay for your education in the mental health field, you’ll need to consider how you will eventually repay those loans. It can also be challenging to navigate career opportunities when you know that you have student loans to repay. The good news: You’re not alone. And there is no one right path to pay back student loan debt.

It can be helpful to talk to graduates and see how they paid off student loans. One big crossroads can be whether to take a higher paying job in the private sector or work in a nonprofit role that could give you an avenue toward loan forgiveness through a program like the Public Service Loan Forgiveness Program (PSLF). Another option to manage repayment is to use an income-driven repayment plan, like the new Saving on a Valuable Education, or SAVE, Plan (which will replace the existing Revised Pay As You Earn, or REPAYE, Plan).

There may also be programs unique to your career. For example, the Health Resources and Services Administration (HRSA), a government branch, offers loan repayment programs for mental health professionals who meet certain criteria, such as serving in a health professional shortage area. Speaking with your supervisor, your colleagues, and keeping abreast of news within professional organizations can help alert you to unique repayment opportunities.

Recommended: REPAYE vs PAYE: What’s the Difference?

What is a Student Loan Forgiveness Program?

A student loan forgiveness program operates the way it sounds: Student loans can be forgiven if certain criteria within the program are met. But each student loan forgiveness program has different criteria. It’s important to completely understand the scope of the forgiveness program. Reading this student loan forgiveness guide can help you understand where the national conversation is regarding loan forgiveness in the future as well as options available for forgiveness now.

When student loans are forgiven, usually after a set amount of payments, the balance is forgiven. But that balance may be taxed, depending on the program. For example, forgiveness received under PSLF is not considered taxable, according to the IRS. But under PAYE and REPAYE programs, any canceled student loan debt is considered taxable.

There may also be loan repayment assistance programs (LRAPs) for your profession or field, as well as state-sponsored loan forgiveness programs.

Recommended: Supreme Court Blocks Student Loan Forgiveness

Will Student Loans be Forgiven After Ten Years?

Loans are not automatically forgiven after ten years. But one potential avenue for mental health student loan forgiveness is the federal Public Service and Loan Forgiveness (PSLF) program. This program requires eligible candidates to work with a qualifying organization and make 120 qualifying monthly payments. It also requires that the loans you hold be federal Direct Loans (or that the federal loans you currently have are consolidated into a Direct Loan).

Qualifying for PSLF can be challenging and requires borrowers to certify their employment to be sure their payments count toward the program. In addition to making 120 payments while working at a qualifying employer, you have to be working for a qualifying employer when you submit the forgiveness application and when the loan is forgiven.

Consult with your loan servicer if you have any questions and be sure to read all of the details about the program.

Typical Requirements for Student Loan Forgiveness

In general, forgiveness programs have criteria. These may include:

•  A history of payments, with no payments skipped

•  Working at a qualifying organization, in a qualifying capacity (ie, full-time instead of part-time)

•  Correctly filling out paperwork for forgiveness

•  Potentially paying taxes on the amount forgiven

Understanding the criteria, reading the fine print, and researching any points of confusion can be helpful in ensuring that your application is processed successfully. The eligibility and forgiveness requirements may vary depending on the forgiveness program, so be sure to fully understand the criteria for the loan forgiveness option you are pursuing.

Difference Between Loan Forgiveness, Loan Cancellation, and Loan Discharge

These three terms are sometimes used interchangeably. Quite simply, all three terms mean you’re no longer required to pay some or all of your loan. But there are no “easy” ways to get out of paying student loans.

Usually, forgiveness and cancellation mean that, due to either a forgiveness application or your current job, you no longer have to pay loans. Discharge refers to a situation beyond your control, such as total and permanent disability or the closure of your school. In very rare cases, student loans are discharged due to bankruptcy. You will likely have to apply for cancellation, forgiveness, or discharge and will likely need to continue making payments while the application is processed.

Recommended: Bankruptcy and Student Loans, Explained

Student Loan Forgiveness Options For Mental Health Workers

Depending on your place of employment, you may have other options for forgiveness through specific mental health worker programs. There also may be scholarships and grants available in your field of study. Also something to consider: Some private employers offer student loan repayment as part of their packages. This can be worth asking potential employers as you look for jobs. There are also other federal programs to know about:

PPACA and HERA Student Loan Programs for Counselors

As part of the Patient Protection and Affordable Care Act, legislation expanded opportunities for student loan forgiveness for healthcare professionals, including mental health counselors. While many of these forgiveness programs are state-run, this act did ensure that any forgiven funds would not be considered taxable income for people seeking forgiveness through programs supporting health care professionals working in underserved areas.

Under the Higher Education Reconciliation Act (HERA) certain federal loans, including Stafford Loans, and Direct Loans (both Subsidized and Unsubsidized Direct Loans) are eligible for a graduated repayment plan. Under this plan, your federal loan repayments start low and gradually increase every two years. This can be an option if you expect your income to increase over the years.

National Health Services Corps Loan Repayment Program

The National Health Services Corps offers loan repayment programs through your state. Each state has different eligibility requirements, including eligible disciplines. These state-run programs also may differ in terms of service commitments but usually, the commitments start at two years for an eligible position. These will generally be at centers funded by the Health Resources and Services Administration.

Mental Health Loan Forgiveness Alternatives

The criteria and requirements for some forgiveness programs can be challenging to fit. But that doesn’t mean there’s no way to pay down loans. Understanding all your options can help you navigate the best potential avenue for you.

Refinance Your Mental Health Student Loan

Refinancing your student loans could potentially help save you money in the long term, and might give you more flexibility in your budget.

When you refinance, you take all your loans and consolidate them into one loan. For qualifying borrowers, this loan may have a lower interest rate, which could reduce the amount of money you owe in interest over the life of the loan. It also may have a different payment term, so that you are paying the loan off over a longer (or shorter) period of time. Keep in mind that, while a longer loan term may result in lower monthly payments, it might also mean paying more in interest over the life of the loan.

You can often check your loan refinance rate without affecting your credit score and choose terms that work for you.

Scholarships and Grants

There may be scholarships and grants, either from your institution or your place of work. This can help pay down student loan debt. It’s also worth remembering that some private-sector employers may offer student loan repayment as a perk. Talking with colleagues, supervisors, and the financial aid office at your school may help you find programs that may be specific to your field or your school.

Pay Off Student loan Debt

In some cases, it may make sense to prioritize paying down student loan debt. This may include taking on part-time work, decreasing living expenses, and trying to carve out opportunities to pay more than the monthly student loan payment. These strategies can help you pay off your student loans faster and, in turn, could lower the total cost of the loans.

The Takeaway

Working as a mental health professional can be rewarding, but might require you to borrow money to pay for your education. There are numerous options both for taking out and paying back student loans for mental health counselors and therapists. Depending on your profession and employer, you might qualify for certain types of loan forgiveness, such as Public Service Loan Forgiveness Program (PSLF), if you have federal student loans.

It can be helpful to talk to colleagues about their student loan pathway, join professional organizations, and keep an ear to the ground regarding grants, scholarships, and employer-sponsored loan repayment programs.

Also keep in mind that you can use a private student loan to help pay for your undergraduate or graduate education in the mental health field (or to refinance loans you already have). While private loans don’t come with government-sponsored protections like PSLF, some private lenders offer hardship and deferment programs of their own.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ on Mental Health Forgiveness

How do counselors and mental health professionals plan for the future with student loan debt?

Understanding options for paying back loans can be helpful for mental health professionals. Depending on what type of loan you have and what type of mental health work you do, your loan repayment options might include Public Service Student Loan Forgiveness (PSLF), income-based repayment plans, and refinancing your student loans. You might also consider taking a job in the private sector, which may pay more and allow you to comfortably cover loan payments.

Do healthcare workers qualify for loan forgiveness?

In some cases, healthcare workers qualify for eligible forgiveness programs. This depends on the state the healthcare worker resides, as well as their place of employment.

What are some student loan forgiveness options for mental health workers?

Mental health workers who work in underserved areas may be able to apply for forgiveness programs run at their state level for healthcare professionals. Eligibility depends on criteria including place of employment. Student loan forgiveness options may also include the federal Public Service Loan Forgiveness program (PSLF), as well as some income-based repayment options.

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Photo credit: iStock/Vertigo3d

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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With mass student loan forgiveness blocked by the Supreme Court, you may be curious about what other forgiveness or deferment options are available for students with federal — or private — student loans.

Federal loans do allow you to stop or reduce your payments in some circumstances, such as financial hardship, for up to three years — which is known as deferment. Deferment on private student loans varies by lender, and not all lenders offer it.

One thing you generally don’t want to do — simply stop making payments on your student loan. Whether your loans are federal or private, this puts you at risk of default, which can have a number of negative consequences.

Read on to learn more about student loan deferment, including what it is, how it works, its pros and cons, plus some alternative ways to get student debt relief.

What Is Student Loan Deferment?

Student loan deferment allows qualified applicants to reduce or stop making payments on their loans for up to three years. If you have a subsidized federal loan, no interest accrues during the deferment period. If you have an unsubsidized federal loan, interest will accrue and will be added to the loan amount (or capitalized) at the end of the deferment period.

Deferments are available on federal loans including Direct Loans, FFEL Program loans, and Perkins Loans.

Private student loans may or may not offer deferment options to borrowers. If you have questions about your private student loan, you’ll want to check in with your lender directly.

How Does Student Loan Deferment Work?

If you have a federal student loan and are no longer in school at least half-time, you will need to apply to defer payments on your student loan. This usually involves submitting a request to your student loan servicer. You will also likely need to provide documentation to show that you meet the eligibility requirements for the deferment (more on eligibility requirements below).

If you have an unsubsidized federal student loan and are granted deferment, interest will continue to accrue during the deferral period. You will have the option to either pay the interest as it accrues or allow it to accrue and be capitalized (added to your loan principal balance) at the end of the deferment period.

Deferments are available on federal loans including Direct Loans, FFEL Program loans, and Perkins Loans.

If a private lender offers deferment, they will likely have their own forms and requirements.

Why Defer Student Loans

Applying for deferment may make sense if you are facing short-term difficulty paying your student loans, since a deferment can provide you with the opportunity you need to stay afloat financially. And, if you have a subsidized loan, deferment won’t make your loan any more expensive in the long run.

Deferring student loans also won’t directly impact your credit score.

Why Not Defer Student Loans

If you’re able to stay on top of your loan payments, then deferment likely doesn’t make sense. If you think that you may have long-term difficulty making your monthly loan payments, deferment may not be the best option either.

If you have an unsubsidized federal loan, interest will continue to accrue during deferment. At the end of the deferment period, this interest will be capitalized on the existing loan amount (or the principal loan value). Moving forward, interest will be calculated based on this new total. So essentially, you are accruing interest on top of interest, which can significantly increase the amount of interest owed over the life of the loan.

Pros and Cons of Student Loan Deferment

Student loan deferment can help borrowers who are struggling financially, but it may not be the right choice for everyone. Here are some pros and cons to consider when evaluating deferment options for federal student loans.

Pros	Cons
Borrowers are able to temporarily suspend or lower the monthly payments on their student loans.	On most federal student loans, interest continues to accrue. This may significantly increase the total cost of borrowing over the life of the loan.
Borrowers may qualify for deferment for periods of up to three years.	Because interest may continue to accrue during deferment, other options like income-driven repayment plans, may be more cost- effective in the long term.

Types of Student Loan Deferment

For federal student loans, there are a few different deferment options . Here are the details on some of the most common reasons borrowers apply for deferment.

In-School Deferment

Students who are enrolled at least half-time in an eligible college or career program may qualify for an in-school deferment. If you are enrolled in a qualifying program at an eligible school, this type of deferment is generally automatic. If you find the automatic in-school deferment doesn’t kick in when you are enrolled at least half-time in an eligible school, you can file an in-school deferment request form .

Unemployment Deferment

Those currently receiving unemployment benefits, or who are actively seeking and unable to find full-time work, may be able to qualify for unemployment deferment. Borrowers can receive this deferment for up to three years.

Economic Hardship Deferment

This type of deferment may be an option for those borrowers who are receiving merit-tested benefits like welfare, who work full time but earn less than 150% of the poverty guidelines for your state of residence and family size, or who are serving in the Peace Corps.

Economic hardship deferments may be awarded for a period of up to three years.

Military Deferment

Members of the U.S. military who are serving active duty may qualify for a military service deferment. After a period of active duty service, there is a grace period in which borrowers may also qualify for federal student loan deferment.

Cancer Treatment Deferment

Individuals who are undergoing treatment for cancer may qualify for deferment. There is also a grace period of six months following the end of treatment.

Other Types of Deferment

There are other situations and circumstances in which borrowers might be able to apply for deferment. Some of these include starting a graduate fellowship program, entering a rehabilitation program, or being a parent borrower with a Parent PLUS Loan whose child is enrolled in school at least half-time.

Consequences of Defaulting on Federal Student Loans

If you simply stop making payments as outlined in your loan’s contract, you risk defaulting on your student loan. Default timelines vary for different types of student loans.

Most federal student loans enter default when payments are roughly nine months, or 270 days, past due. Federal Perkins loans can default immediately if you don’t make any scheduled payment by its due date.

•   Immediately owing the entire balance of the loan

•   Losing eligibility for forbearance, deferment, or federal repayment plans

•   Losing eligibility for federal student aid

•   Damage to your credit score, inhibiting your ability to qualify for a car or home loan or credit cards in the future

•   Withholding of federal benefits and tax refunds

•   Garnishing of wages

•   The loan holder taking you to court

•   Inability to sell or purchase assets such as real estate

•   Withholding of your academic transcript until loans are repaid

Consequences of Defaulting on Private Student Loans

The consequences for defaulting on private student loans will vary by lender but could include repercussions similar to federal student loans, and more, including:

•   Seeking repayment from the cosigners of the loan (if there are any cosigners)

•   Calls, letters, and notifications from debt collectors

•   Additional collection charges on the balance of the loan

•   Legal action from the lender, such as suing the borrower or their cosigner

To avoid these negative consequences, one option for borrowers struggling to pay federal student loans is deferment.

Who Is Eligible for Student Loan Deferment?

To be granted a deferment on federal loans, borrowers need to meet certain criteria.

You may be eligible if you’re:

•   Enrolled at least part-time in college, graduate school, or a professional school

•   Unable to find a full-time job or are experiencing economic hardship

•   On active military duty serving in relation to war, military operation, or response to a national emergency

•   In the 13-month period following active duty

•   Enrolled in the Peace Corps

•   Taking part in a graduate fellowship program

•   Experiencing a medical hardship

•   Enrolled in an approved rehabilitation program for the disabled

Borrowers who re-enroll in college or career school part-time may find that their federal student loans automatically go into in-school deferment with a notification from their student loan provider.

Loans may also keep accruing interest during deferment — depending on what kind of federal student loans the borrower holds. Borrowers are still responsible for paying interest if they have a:

•   Direct Unsubsidized (Stafford) Loan

•   Direct PLUS Loan

If you don’t pay the interest during the deferment period, the accrued amount is added to your loan principal, which increases what you owe in the end.

Recommended: Student Loan Deferment in Grad School

What if You Have Private Student Loans?

Private lenders aren’t required to offer deferment options, but some do. For example, some might allow you to temporarily stop making payments if you:

•   Lose your job

•   Experience financial hardship

•   Go back to school

•   Have been accepted into an internship, clerkship, fellowship, or residency program

•   Face high medical expenses

Typically, even while a private student loan is in deferment, the balance will still accrue interest. This means that in the long term, the borrower will pay a larger balance overall, even after the respite of deferment.

In most cases, even with accrual of interest, deferment is preferable to defaulting. Borrowers with private loans could contact the lender to ask what options are available.

The Limits of Student Loan Deferment

Keep in mind that deferment is not a panacea. By definition, it’s temporary. Federal student loan borrowers will ultimately need to go back to making payments once they are no longer deferment-eligible. For example, a borrower’s deferral might end if they leave school, even if their ability to pay has not improved.

Federal loans can only be deferred due to unemployment or financial hardship for up to three years. With private loans, there may not be an option to defer at all, and if it is an option, the limit may be no more than a year.

Other Options for Reducing Federal Student Loan Payments

Besides student loan deferment, you have other choices if you can’t afford the total cost of your monthly payments. Here’s a look at some alternatives to deferment.

Income-Driven Repayments

For a longer-term solution, you may want to consider signing up for an income-driven repayment plan.

If you qualify, you may be able to reduce your monthly payment based on your income. Enrolling in an income-driven repayment plan won’t have a negative impact on your credit score or history. On certain income-driven repayment plans, student loan balances can be forgiven after 20 or 25 years, depending on the payment plan that the borrower is eligible for.

With an income-driven repayment plan, your monthly payment is based on your total discretionary income. That means if you change jobs, or see a significant increase in your paycheck, you’ll be expected to pay a higher monthly bill on your student loan payment.

Forbearance

Student loan forbearance is another way to suspend or lower your student loan payments temporarily during times of financial stress, typically for up to 12 months. Generally, forbearance is not as desirable as deferment, since you will be responsible for accrued interest when the forbearance period is over no matter what type of federal loan you have.

When comparing deferment vs. forbearance, you’ll want to keep in mind that there are two types of forbearance for federal student loan holders: general and mandatory.

General student loan forbearance is sometimes called discretionary forbearance. That means the servicer decides whether or not to grant your request. People can apply for general forbearance if they’re experiencing:

•   Financial problems

•   Medical expenses

•   Employment changes

General forbearance is only available for certain student loan programs, and is only granted for up to 12 months at a time. At that point, you are able to reapply for forbearance if you’re still experiencing difficulty. General forbearance is available for:

•   Direct Loans

•   Federal Family Education Loan (FFEL) Program loans

•   Perkins Loans

Mandatory forbearance means your servicer is required to grant it under certain circumstances. Reasons for mandatory forbearance include:

•   Serving in a medical residency or dental internship

•   The total you owe each month on your student loan is 20% or more of your gross income

•   You’re working in a position for AmeriCorps

•   You’re a teacher that qualifies for teacher student loan forgiveness

•   You’re a National Guard member but don’t qualify for deferment

Similar to general forbearance, mandatory forbearance is granted for up to 12 month periods, and you can reapply after that time.

Another Option to Consider: Refinancing

Depending on your personal financial circumstances, another long-term solution could be student loan refinancing. This involves applying for a new loan with a private lender and using it to pay off your current student loans. Qualifying borrowers may be able to secure a lower interest rate or the option to lengthen their loan’s term and reduce monthly payments. Note that lengthening the repayment period may lower monthly payments but will generally result in paying more interest over the life of the loan.

Refinancing could be a good option for borrowers with strong credit and a solid income, among other factors. Unlike an income-driven repayment plan, your monthly payment wouldn’t change based on your income. If you aren’t able to qualify for student loan refinancing on your own, you may be able to apply for refinancing with a cosigner.

Either way, you’ll want to keep in mind that refinancing federal student loans with a private lender means you no longer have access to any federal borrower protections or payment plans. So, if you are taking advantage of things like income-driven payment plans or deferment, you likely don’t want to refinance. But for other borrowers, student loan refinancing might be a useful solution.

If you have more than one student loan, refinancing could also simplify your repayment process.

The Takeaway

If you take out a federal student loan and at some point need to pause or reduce your payments, you may be able to qualify for deferment, forbearance, or an income-driven repayment plan. Each option has its pros and cons.

If you’re considering a private student loan (or refinancing your federal loans), keep in mind that private loans don’t come with government-sponsored protections like forbearance and deferment don’t apply. However, private lenders may offer hardship and deferment programs of their own.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

Deferment FAQ

How long can you defer student loans for?

Depending on the type of deferment you are enrolled in, federal loans can be deferred for up to three years. Private student loans may not offer an option to defer payments, and if they do, the limit will be set by the individual lender.

Why would you defer student loans?

Deferment can be helpful if you are facing a temporary financial hurdle, because they allow you to pause or reduce your payments for a period of time.

Are there any reasons not to defer student loans?

Most loans will continue to accrue interest during periods of deferment. When the deferment is over, this accrued interest is then capitalized on the loan. This means it’s added to the existing value of the loan. Moving forward, interest is charged based on this new total. This can significantly impact the total amount of interest that a borrower has to pay over the life of a loan.

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Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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The bullish harami pattern consists of two candlesticks and is a sign of a potential bullish turn on a stock. When a downtrend has been in place, a harami can offer traders clues that an upward trend is forming.

Other technical analysis tools should be used alongside observation of the bullish harami pattern for better confirmation. The pattern is useful when analyzing assets other than stocks, for example, the bullish harami pattern is also applicable to cryptocurrency charts.

Period 1 of a bullish harami is a long bearish candle, often after a series of down days. Period 2’s candlestick has a smaller body, sometimes even a doji (a candle with little to no body due to opening and closing prices being very close.

What Is a Bullish Harami Pattern?

A bullish harami candlestick pattern indicates a bottom may be forming. This two-day candlestick pattern is a signal that a bullish reversal might be taking shape.

You can learn more about candlestick charts on SoFi Invest.

Period 1’s candle is a large red body (or black depending on your candlestick chart settings) which is bearish. It might be a bearish marubozu, a candle with no wicks — that means the opening price is the high of the day and the closing price is the low of the day. Period 1’s candle could also have small wicks.

An upper wick is price action above the opening price and closing price. A lower wick is trading activity below the opening and closing price.

Period 2 features a small green (or white) body. This candle is contained within period 1’s candle. This is also known as an inside day pattern. Period 2’s trading action includes a gap higher at the open and a closing price that is slightly higher than the opening price. The upper and lower wicks should be within the body of the first day’s candle.

Day 2 is often a minor increase in price that might seem unimportant, but the pause in the prior downtrend is taken as a signal of bearish exhaustion. Some traders further limit the size of period 2’s candle such that the candle body is no larger than 25% of period 1’s candle.

As with most candlestick patterns, it is important to know the context of the larger trend. With a bullish harami candlestick pattern, the existing trend is bearish.

A bullish harami is just one of many bullish technical indicators.

On the flip side, a bearish harami candlestick pattern happens after a bullish trend, and can indicate the start of a new bearish trend.

What Does a Bullish Harami Pattern Tell Traders?

A bullish harami pattern tells traders to be on guard against a quick change in trend. For bears, that means it might be prudent to cover short positions. For bulls, this type of harami candlestick pattern can be a signal to get long.

Before putting on big positions, the wise trader reviews other technical indicators for confirmation of a change in trend. Momentum tools such as oscillators, moving average crossovers, and subsequent bullish candlestick patterns can help confirm the predicted bullish reversal.

The crucial aspect of a bullish harami pattern is period 2’s gap up in price and higher close. A small body, sometimes a doji, shows indecision on a price chart. It indicates that bearish momentum could be slowing and perhaps the bulls are ready to take charge.

If period 2’s candle is a doji, traders refer to the pattern as a bullish harami cross. The “cross” refers to the doji candlestick.

Example of a Bullish Harami Pattern

It can be helpful to use an example of a stock’s price action to show how a bullish harami pattern works.

While the harami candlestick formation is frequently used and offers a favorable reward/risk ratio, it does not guarantee profits. It’s important to know the existing price trend and use other trading tools for better results.

Initially, you want to identify that a downtrend was in place before the harami pattern appeared. Let’s say a stock was trading at $100 one year ago, and it closed at $30 on the most recent trading day. You can use other technical tools like moving averages to help confirm the bearish price trend.

Next, look for clues that the bears are losing their stranglehold on the security — that could be seen with a bullish hammer or other candlestick patterns. This is not a requirement, but it can be a telltale signal that a reversal is not far off. What’s important is that a bearish trend is in place before day 1’s candle.

In our example, let’s say day 1’s candle opens with a small gap down to $29. Intraday price action is bearish. The stock closes at $26, near the low of the day. Bears are excited as a downward price trend seems to be continuing. The stock’s sentiment is likely very bearish.

Day 2 opens with a minor gap higher to $27. The low of the day and high of the day are tight — between $26.50 and $27.50. The stock settles up on the day at $27.20. That is also slightly above the opening price.

The entire session’s trading activity is within day 1’s range.

While other candlestick patterns require a third day to help confirm a reversal in trend, a bullish harami pattern does not. Traders use the two-day candlestick pattern to identify a bullish price reversal.

Other technical indicators, like the relative strength index, can be used to show that the market is in an oversold condition.

💡 Quick Tip: Did you know that opening a brokerage account online typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

Does the Bullish Harami Pattern Work?

When researching stocks, technical analysis is used to help traders improve their chances of making profits over time. One indicator is never a sure thing, though.

It is helpful to analyze price action around the harami and to use other tools to spot key areas of support and resistance.

A bullish harami pattern has advantages and disadvantages. Let’s describe those.

Benefits of the Bullish Harami Pattern

An upshot to the bullish harami is that it can offer early long entry points when a bullish trend begins. That means the risk to reward ratio can be very favorable.

Moreover, it is an easy pattern to identify on a price chart.

Drawbacks of the Bullish Harami Pattern

There are some limitations, however.

You should not use the harami in isolation. You also must know the prevailing price trend when looking for a bullish harami pattern.

Finally, you should have a grasp of momentum indicators to help support the case for a bullish reversal.

How to Trade a Bullish Harami Pattern

You trade the bullish harami pattern by spotting a small bullish candlestick after a long bearish candle within an existing downtrend. You can use momentum oscillators and other technical indicators to help confirm a bullish reversal is taking shape.

A buy order can be executed after period 2’s candlestick. A trader might place a stop loss order below the low price over the 2-day harami pattern.

Since a new bullish trend pattern may be developing, look for multiple upside price targets to take profits based on prior support and resistance levels.

Bullish Harami Pattern in Crypto

Bullish harami candlestick patterns can be found on several timeframes and across many assets. It is a popular indicator among cryptocurrency traders. The tight risk range can lead to attractive risk-to-reward ratios.

A downside with crypto markets, since they trade 24/7, is that it is rare to see a price gap, so that is a limiting factor, but it can make the pattern even more important when it does appear on a crypto chart. Some traders also make allowances for no gap in price between periods, with all other factors in place.

The Takeaway

The bullish harami is a two-day candlestick pattern indicating a prior bearish trend could be reversing. A bullish harami candlestick pattern could signal that a bottom may be close, and that a bullish trend might be taking shape.

Period 1 of the pattern features a large bearish session with downward price action.

Period 2’s candle has a small body often with minor upper and lower wicks. The bullish harami candlestick pattern is used to spot signs of bearish exhaustion.

An upshot to the bullish harami is that it can offer early long entry points when a bullish trend begins. That means the risk to reward ratio can be very favorable, but this does have its limitations, and is best used by experienced investors when considering their goals.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

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