Knowing your options to repay student loans is important, but knowing how to pay them when your struggling financially is even more important. If you’ve decided not to enroll in an income-driven repayment plan and instead want to postpone making monthly loan payments then deferment and forbearance are right for you. With deferment and forbearance you don’t have to completely postpone your payments, but you can also reduce the amount you owe each month. Choosing one of these options could also keep you from going into default.
With deferment you usually don’t pay the extra interest that accrues, but it depends on the type of loan you have. If you have a Direct Subsidized loan, Subsidized Federal Stafford loan, Federal Perkins loan, a subsidized portion of a Direct Consolidation loan or FFEL Consolidation loan then you aren’t responsible for paying accrued interest. If you do have to pay interest you can pay as it accrues or wait for it to be capitalized at the end of forbearance or deferment period.
You may be eligible for deferment if:
You are enrolled at least part-time school and have received a Direct PLUS loan or FFEL PLUS loan as a professional or graduate student for 6 months after falling below part-time enrollment.
Enrolled in an eligible training program for the disabled
Enrolled in an eligible graduate fellowship program
Unemployed or unable to find a full-time position, for up to 3 years
Experiencing financial difficulty
On active military duty or serving in the Peace Corps
You may be eligible for general forbearance if:
You are experiencing financial hardship due to employment or other expenses
Your loan service provider has discretion in determining whether to grant a request for general forbearance
If granted, forbearance can only be issued for up to 12 months at a time
You may be eligible for mandatory forbearance if:
Enrolled in a medial or dental internship or residency and meet the specific requirements
Your total monthly payment is 20% or more of your monthly gross income
Enrolled in a teaching service that makes you eligible for teacher loan forgiveness
Member of the National Guard and activated by a governor
Serving in the AmeriCorps and received a national service award
You qualify for partial repayment of your loans
Forbearance can only be issued for up to 12 months at a time
Even if you do meet these requirements, eligibility for both deferment and forbearance depend of the type of loan you have. However, these options provide a way for you to avoid default and make it easier for you to deal with the financial burden of student loans.