Student Loan Deferment and Student Loan Forbearance
Graduating students always wonder what is student loan deferment & what is student loan forbearance in case they run into financial hardship because they may not be able to land a job quickly and their student loan repayment plan period will begin to start. Sometimes students graduate from college and need to use student deferment or student forbearance because they find that they are having trouble repaying student loans they’ve taken out to attend college. These two programs can keep your student loans from falling into default status – which brings a whole host of additional financial troubles on its own.
Let’s first take a look at student forbearance. Forbearance on student loans is an option when you are having financial hardships, but you do not qualify for a student deferment. In student loan forbearance, your payments are temporarily put on hold or reduced, depending on your situation. Student forbearance can be established for a period of twelve months, and renewed each year for up to three years. However, during this time, interest on the loans is still accumulating, and you will have to prove your financial hardship to the lender before student loans forbearance is granted.
If you meet certain requirements, your lender cannot deny you student forbearance. These requirements are that you are in a medical or dental residency program, if your student loan payments equal more than twenty percent of your monthly income, or if your payments are being made by the Department of Defense. Any one of these situations makes student loan forbearance mandatory by your lender.
A student loan deferment is much the same as student forbearance, with a few differences. A student deferment is usually only granted to those who are still enrolled in school at least half time or to those who are unable to find fulltime employment. In the case of inability to find fulltime employment, the student loan deferment can last for up to three years. Student loans deferment can be granted to students who owe student loans, as well as parents who owe PLUS loans.
Student deferment is also granted to those who are on active military duty, and that deferment will last until 180 days past the end of the active military service. Unlike student forbearance, interest does not accumulate during a student loan deferment – except in the case of unsubsidized Stafford Loans and PLUS loans.
To see if you qualify for student loan deferment or student forbearance, you must contact your lender or loan administrator to discuss your situation. Obviously, it is important that you do this before you stop making payments, because you do not want to fall into default status when repaying student loans.
Overall, there are more situations that make you eligible for student loans forbearance than there are to defer student loans, which makes it hard for most people to understand why you must not be eligible for student deferment to be eligible for forbearance of a student loan. However, because interest still accumulates with student forbearance, typically the financial hardship that creates the need for a student deferment of your loan doesn’t have to be as great to be granted forbearance of student loans.
If you contact your lender or loan administrator and discuss your financial situation and hardship with them honestly, they will be able to tell you whether you qualify for student loan deferment or student loan forbearance, and they will help you take the necessary steps for either program.
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