Getting a Deferment or Forbearance on Your Student Loan

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Getting a Deferment or Forbearance on Your Student Loan

If you have trouble making payments on your student loans, the last thing you should do is just stop paying. Not paying will damage your credit and subject you to late fees. It can also result in you being sued and having your wages and tax refunds garnished. You might qualify for postponement instead. Let’s look at the two forms of postponement.

Deferment

A deferment lets you out of making loan payments for a certain length of time for a specific reason, such as economic hardship, unemployment, or being enrolled in school. To get one, you must contact the lender of your loan and fill out some forms. If you are currently in default, you cannot qualify for a deferment unless you first pay off a certain amount of the outstanding balance.

What qualifies you for a deferment?

Here are a number of situations that can get you a deferment on a federal loan (and some non-federal loans):

• Economic hardship. Most loans offer deferment for economic hardship. The lender will look at your income and your loan payments to make a decision on this. If you receive public assistance, you are automatically entitled to a deferment.
• Enrollment in school or disability rehabilitation program. Returning to school at least half-time will allow you to defer payments. Enrolling in a disability rehab program can also get you a deferment.
• Unemployment. If you are unemployed but looking for work, you can qualify for a deferment.
• Disability. If a temporary but total disability occurs with you, your spouse, or a dependent, you may qualify for a deferment. Not all loans apply, however.
• Public service. Perform community service and get a deferment. There are many opportunities available, from local activities such as assisting low-income people to volunteer opportunities on the national level. Serving in the military or certain other federal services can qualify you for a deferment also.
• Your job. You may qualify for a deferment if you work as a teacher serving certain needy populations, such as the disabled. Also, certain healthcare and medical workers can get deferments.

These are general guidelines. Some of them are based on specific requirements that you must first meet. Contact your lender for more information.

Forbearance

Forbearance on a student loan is similar to deferment. Your payments are postponed (or reduced) for a period of time due to financial or other difficulty. Generally, you can get a forbearance if you aren’t eligible for a deferment.

With a forbearance, the interest on your loan will continue to accrue, meaning that you are responsible for paying it. With a deferment, interest does not accrue. You must pay the interest on a forbearance; if you fail to pay any amount of it, that amount will be added on to the principal of the loan, a process called capitalization.

Contact your lender if you want a forbearance. They are easier to get than deferments.