Savanna Hoffman
If you're struggling to pay your student loans, there are a few options to consider that can help you delay payments without facing serious financial consequences. Firstly, it's important to contact your loan servicer to discuss your options and prevent your account from becoming delinquent, which can hurt your credit rating. One option is loan deferment, where you can temporarily postpone payments if you're returning to college, attending graduate school, or entering certain training programs. Deferment can be requested in increments of up to 12 months for a maximum of 48-60 months, depending on the loan type. During deferment, interest may continue to accrue, increasing the total loan cost. Another option is forbearance, where payments are suspended or reduced, but interest continues to accrue. Additionally, consolidating multiple federal student loans into one loan with a lower interest rate can help simplify repayment. It's important to carefully consider these options and their potential impact on your financial situation.
| Characteristics | Values |
|---|---|
| Loan deferment | Postponement of payments. Interest money owed will continue to accrue. |
| Forbearance | Suspension or reduction of payments. Interest owed continues to accrue. |
| Direct Consolidation Loans | Combine multiple federal student loans into one loan at a lower interest rate. |
| Sallie Mae Deferment | Request a deferment of up to 48 months for undergraduate or graduate student loans while enrolled at least half-time. |
| Federal Loan Deferment | Temporary pause on payments for specific situations like active military service or reenrollment in school. |
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What You'll Learn
Loan deferment
A loan deferment is a temporary postponement of your student loan payments. Deferments are available for specific situations, such as active military service or reenrollment in school. You can apply for a deferment with your loan servicer, but you must continue to make payments until your deferment is approved. The U.S. Department of Education has published a list of reasons that qualify for deferment.
During a period of deferment on a subsidized loan, you are not required to pay interest. However, if you have an unsubsidized loan, you are responsible for the interest that accumulates during the deferment period. If you are unable to pay the interest, it will be added to your loan balance, increasing the overall amount you have to repay.
Private student loans may or may not offer a deferment option, and the rules vary among lenders. It is important to contact your loan servicer as early as possible to discuss this option and understand the terms and fees associated with postponing payments. The conditions for deferring private student loans are outlined in your contract and applicable laws and may differ for each servicer.
Forbearance is another option to consider if you are unable to make payments on your federal student loans. Forbearance allows you to temporarily stop making payments or reduce your monthly payment amount for a set period. It is important to explore the options available to you and understand the terms and conditions of any loan deferment or forbearance before making a decision.
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Forbearance
If you're struggling to make your student loan payments, you may be able to temporarily pause or reduce your payments through a process called forbearance. Forbearance is a temporary suspension or reduction of your monthly student loan payments. It can be a helpful option if you're facing financial difficulty and need some breathing room to get back on track.
There are two main types of forbearance: general and mandatory. General forbearance is granted at the discretion of your loan servicer, and you may need to provide documentation to show that you're experiencing financial hardship. This could include things like medical expenses, unemployment, or other financial obligations. Mandatory forbearance, on the other hand, is granted under certain specific circumstances, such as if your monthly student loan payment is more than 20% of your monthly income, or if you're serving in a national service position like AmeriCorps.
To apply for forbearance, start by contacting your loan servicer and asking about your options. They may have different requirements and application processes, so it's important to initiate the conversation with them directly. Be prepared to provide information about your income, expenses, and any relevant details about your situation. If you're granted forbearance, keep in mind that it's usually a temporary solution, and you'll eventually need to resume making regular payments.
During forbearance, interest will still accrue on your loans. This means that even though you're not required to make payments, your balance will continue to grow. To minimize the cost of forbearance, consider paying the interest during this period if you're able to. This will help keep your balance from ballooning and save you money in the long run.
Remember that forbearance is just one option to consider if you're struggling with student loan payments. There may be other alternatives, such as income-driven repayment plans or loan consolidation, that could provide more permanent solutions. Carefully weigh your options and consider seeking advice from a student loan counselor or financial advisor to find the best path forward for your unique situation.
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Direct Consolidation Loans
As of May 18, 2014, the Department of Education offers one Direct Consolidation Loan process. Direct Consolidation Loans allow students to consolidate multiple federal education loans into one loan, which can make repayment more manageable.
To learn more about Direct Consolidation Loans, you can visit the official StudentAid.gov website. Here, you will find general information about the loan consolidation process and resources to assist you before, during, and after you apply for a Direct Consolidation Loan.
If you have questions about consolidating your loans before applying, you can contact the Federal Student Aid Information Center at 1-800-433-3243. Additionally, if you encounter any technical difficulties while completing the online application, you can request technical assistance by clicking on the "Contact Us" tab on the StudentAid.gov website.
It is important to note that the information provided here is specific to the Direct Consolidation Loan process offered by the Department of Education. There may be other loan consolidation options available from private lenders or other institutions, each with its own unique terms and conditions.
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Contact your loan servicer
If you are struggling to repay your student loan, it is important to contact your loan servicer as soon as possible. Not paying your student loan can have serious consequences, and your account can be marked as delinquent if your payment is even one day late. This can hurt your credit rating and your ability to buy a car or house or get a credit card.
Your loan servicer can help you explore options to delay your payments. One option is loan deferment, where your payments are postponed. In most cases, the interest money you owe will continue to accrue (grow). You can request a deferment if you are reenrolling in school, returning to college, or entering an internship, law clerkship, fellowship, or residency. For example, if you are enrolled in a program that requires a bachelor's degree as a prerequisite, you can apply for deferment in increments of up to 12 months, up to a maximum of 60 months for undergraduate student loans. You can also request a deferment of up to 48 months for graduate school loans, provided you are enrolled at least half-time. During the deferment period, you won't have to make principal and interest payments, but the interest will continue to accrue, increasing your total loan cost.
Another option to explore with your loan servicer is forbearance, where your payments are suspended or reduced. However, similar to deferment, the interest you owe will continue to accrue. Both deferment and forbearance give you a temporary pause in your loan payments.
If you are unsure about the balance or status of your loan, you can talk to your loan servicer to clarify any discrepancies. You can also contact the Federal Student Aid Ombudsman Group for further assistance. It is important to remember that you must continue making your regular loan payments until you are notified that any requested deferment or forbearance has been approved.
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Re-enrolling in school
If you're thinking of re-enrolling in school and have existing student loans, you may be eligible for a deferment. This means you can postpone your loan payments until after you graduate.
Eligibility
Your eligibility for deferment depends on the type of loan you have. Federal in-school deferments are available to borrowers returning to college to earn another degree, certificate, or advanced credential. You must be enrolled at least half-time at an eligible school and working towards a qualifying degree or certificate. If you have a Grad PLUS Loan, you can get an additional six months of deferment after graduating from your program.
For Parent PLUS Loans, parents may qualify for deferment if they are enrolled at least half-time at a college or career school, or if their child is enrolled at least half-time. Deferment is also available for parents serving on qualifying active duty or enrolled in a full-time rehabilitation program for individuals with disabilities.
Interest
When you defer a loan, you extend the amount of time it will take to pay it back. Interest will continue to accrue while you're in school, which will increase your total loan cost. If you have a subsidized federal loan or a Stafford Loan, the government or the U.S. Department of Education will pay any interest you accrue during deferment, so your total loan cost won't increase.
Requesting Deferment
For federal loans, your payments are usually automatically deferred when you enroll, as the school notifies the government about your status. In some cases, you may need to fill out and submit an in-school deferment request form. For private student loans, the process varies by lender, so contact your loan servicer to ask about the required process.
Alternatives
If you are ineligible for deferment or decide it's not right for you, there are other options like forbearance or refinancing. Forbearance is when your student loan payments are temporarily paused or lowered when you're experiencing financial hardship. Refinancing is when you get a new loan with a new interest rate and terms, which can help make payments easier by consolidating multiple loans into one.
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Frequently asked questions
You can delay paying your student loans through loan deferment or forbearance.
Loan deferment is a temporary pause on your loan payments. You can apply for loan deferment in increments of up to 12 months, with a maximum of 60 months for undergraduate loans and 48 months for graduate loans. You can request a deferment if you're reenrolling in school, entering an internship, or performing military service.
Forbearance is when your loan payments are suspended or reduced, but the interest you owe continues to accrue.
You can apply for loan deferment with your loan servicer. If you're applying for deferment for reenrollment in school, your school will need to verify your enrollment.
While deferment and forbearance can provide temporary relief, it's important to note that interest will continue to accrue, increasing the total amount you owe. Delaying payments can also impact your credit rating and affect your ability to make large purchases, such as buying a car or a house.
