There are different reasons why someone might not be able to make payments on their student loans. A deferment or forbearance allows you to temporarily hold off on making your payments, or even reduce the amount that you owe.
What is a Deferment?
A loan deferment is a period of time during which you are temporarily relieved of your obligation to repay the principal and interest on your loan. During your deferment, you are not required to make payments. However, if you have a Federal Perkins Loan, Direct Subsidized Loan, or Subsidized Federal Stafford Loan, the government may even pay your interest for you while you are in a period of deferment. If you have another type of loan, such as a Direct Unsubsidized Loan, or PLUS Loan, you are responsible for the interest at all times, including interest accrued during a deferment.
How Do I Request a Deferment?
A deferment is not automatic - it is also not guaranteed. In order to be considered for one, you must submit a request to your loan servicer (or, for a Perkins Loan, contact the school you received the loan from). If you are currently enrolled at least half-time, and need to request an in-school deferment, you will need to submit a request to both your school's financial aid office and your loan servicer.
What is Forbearance?
Forbearance is typically an option turned to by those who are not eligible to receive a deferment. The forbearance is granted by the loan servicer and it gives the borrower the ability to either stop making payments or reduced their monthly payment for up to a year. There are two types of forbearance that can be granted.
- Discretionary Forbearance - Your lender has the right to decide whether or not, due to financial hardship or illness, they will grant you forbearance.
- Mandatory Forbearance - Your lender is required to grant you the forbearance if you meet all of the eligibility criteria for receiving one. Mandatory forbearance is granted if you identify with one or more of the following:
- Currently serving in medical or dental internship/residency program and meet specific requirements.
- Your total amount owed monthly is 20% or more of your total monthly gross income.
- Currently serving in national service position and have received an award for doing so. (AmeriCorps, Senior Corps, Social Innovation Fund, Volunteer Generation Fund)
- Currently performing a teaching service that will allow you to qualify for Teacher Loan Forgiveness. (See section above on Teacher Loan Forgiveness)
- Under the U.S. Dept of Defense Student Loan Repayment Program, you are eligible for partial repayment of your loans.
- You are a member of the National Guard and have been activated by a governor, but do not qualify for military deferment.
During forbearance, the interest will continue to be charged (even subsidized loans). You will have the option to either pay this interest or let it accrue over the period of time that you are in forbearance. If you choose not to pay it until later, remember that the amount you pay in the future on your payments will be higher.
How Do I Request Forbearance?
In order to request loan forbearance, you must contact your loan servicer. Sometimes, but not always, you may be required to provide certain documents to accompany your request for forbearance.
*Until you are notified that you have been granted a deferment or forbearance, you MUST continue to make your monthly payments. If you do not make payments, you will become "delinquent" and cause yourself to default on your loan.