Student Loan Forbearance

Forbearance Can Provide Temporary Financial Relief for Your Student Loan Payments

If, for any reason, you can’t make your student loan payment and don’t qualify for a deferment, another temporary solution is forbearance. A forbearance lets you temporarily stop making payments, temporarily make smaller payments or extend the time for making payments.

Illness, financial hardship because of unemployment or internships or residency are reasons to request a forbearance.

Student Loan Forbearance -You can’t Get Forbearance If your loan is in default

The two types of forbearance are mandatory forbearance and discretionary forbearance.

Discretionary is just that! It is up to your student loan lender to decide to grant you a forbearance or not and the two common reasoen are financial hardship and illness.

Mandatory is just that and if you can prove you meet the requirements you lender must grant you a forbearance. The requirements include:

1. Serving in a medical or dental internship or residency,
2. The total of all your loan payments meets or exceeds 20% of your monthly gross income,
3. You are serving in a national service program where you received national service award,
4. You are serving as a teacher in a position that qualifies you for teacher loan forgiveness,
5. You are qualified for partial repayment of your loans under the Department of Defense Loan Repayment program,
6. You are National Guard member that has been activated but you don’t qualify for military deferment.

You must submit an application and be approved for forbearance before you stop making payments.

What about the interest on my student loan in deferment?

When you are in deferment you have the right to make interest payments or have the interest added to the principal amount of the student loan. The problem with accruing interest during deferment is that at the end of the deferment, you will owe much more than you owed because of that interest and your payments will be higher!

The difference between forbearance and deferment is that interest does not accrue during deferment. The government covers any interest on any subsidized loan during deferment.

Income Based Payment Programs or Disability Discharge Programs May Be Better than Deferment

If you can’t find a job o are experiencing economic hardship, a better option just might be income based payment programs which can provide permanent relief and lower your payments without tacking on interest to your total student loan debt.

On the other hand if you are experiencing economic hardship because of an illness or disability that is permanent and total, you might qualify for a total and permanent disability discharge that wipes out your student loan debt.

Why You Should Consult a Student Loan Attorney if You are Thinking about Deferment