Student loans become due after graduation, and the payments can become a burden during hard times. Individuals with student loans can request deferments, forbearance, income-based repayments or consolidation to make payments more manageable. Federal student loan lenders are obliged to provide these options in some circumstances, while private lenders will only do so at their discretion.
Qualifying for Loan Options
Whether or not you're able to obtain a deferment, forbearance, consolidation or other change in your payment status depends on your loan provider. Federal student loan providers are mandated to provide you a forbearance or deferment under certain conditions. However, the exact terms and requirements depend on which type of federal student loan you hold. You often work with private lenders to negotiate changes in payment, but they are not legally required to offer you a deferment or forbearance.
A deferment allows you to delay student loan payments for a specified period of time. For federal loans, you won't accrue interest on the principal during a deferment. In fact, if you have a subsidized Stafford, Direct or Perkins loan, the government may actually make interest payments on your behalf during the deferment period. You are automatically eligible for a federal deferral if you're enrolled in school at least half-time, are unemployed, in economic hardship or in the military. Individuals with a Perkins loan should contact their school directly to request a deferment. Direct loans, FFEL loans, and private loans should contact their loan provider to request a deferment.
Individuals who don't qualify for a deferment may consider a forbearance. In a forbearance, you can stop or reduce monthly payments for a period of time while interest continues to accrue on the loan. Federal student loan providers must automatically grant a forbearance if the individual is a member of the National Guard, in a medical or dental internship, or if the amount you owe is more than 20 percent of your gross income. Otherwise, a forbearance is at the discretion of the lender. To request a forbearance, contact your loan provider directly.
Borrowers have alternatives to deferments and forbearance. Individuals with federal loans can apply for income-based repayment, which reduces monthly payments based on current income level. You also may be able to consolidate student loans, which allows you to extend the amount of time you have to pay them. However, interest rates on consolidated loans are often higher than they are on the individual loans, so you may pay more interest in the long run.
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