Student loan forbearance and deferment temporarily alleviate financial difficulties for borrowers Such arrangements enable the borrowers to delay or temporarily suspend their loan installments for some time Knowledge about how deferment and forbearance differ from each other assists students and graduates in coping with their student loans at difficult times
What Is Student Loan Deferment
Deferment enables borrowers to temporarily suspend payments on their student loans
During deferment interest does not accrue on subsidized federal loans but continues to build up on unsubsidized and private loans
Who Is Eligible for Deferment
Borrowers can be eligible for deferment under the following conditions
School attendance at least half time Students can defer payments when they are pursuing additional education
Unemployment or financial hardship Borrowers who are unemployed or experiencing financial hardship may be eligible
Active duty military service Active duty service members can put loans on hold while serving
Graduate fellowship program Some professional study or research programs are eligible for deferment
What Is Student Loan Forbearance
Forbearance also permits borrowers to suspend or lower payments temporarily but interest keeps accumulating on all loan types including subsidized federal loans and private loans
Who Qualifies for Forbearance
Borrowers can apply for forbearance in the following circumstances
Financial difficulty Temporary inability to make payments because of economic hardship
Medical expenses Unusually high medical expenses that compromise financial stability
Job loss Borrowers who lose their means of income can apply
Natural disasters Some lenders provide forbearance for borrowers experiencing natural disasters
Key Differences Between Deferment and Forbearance
Feature\tDeferment\tForbearance
Interest Accrual on Subsidized Loans\tNo\tYes
Interest Accrual on Unsubsidized Loans\tYes\tYes
Eligibility Based on Financial Hardship\tSometimes\tYes
Duration Up to three years Usually up to one year
Federal Loan Eligibility Yes Yes
Private Loan Eligibility Varies by lender Varies by lender
How to Apply for Deferment or Forbearance
Step by Step Guide
1 Contact the Loan Servicer
Borrowers need to contact their loan servicer to talk about eligibility and ask for deferment or forbearance forms
2 Complete the Application
Complete the necessary paperwork and submit required documentation like proof of financial hardship or school enrollment
3 Keep Making Payments Until Approved
Loan payments should be continued until approval is obtained to prevent delinquency
4 Check New Loan Status
Upon approval borrowers should check deferment or forbearance status on their loan account
Advantages Benefits of Deferment and Forbearance
Advantages
Offers temporary respite for financial struggles
Saves loans from default
Enables borrowers to concentrate on employment search or additional education
Disadvantages
Interest may still be accrued adding total loan cost
Stretches out the period of repayment
Not always offered for private loans
Alternative Options
If forbearance or deferment isn’t the way to go borrowers can look into other options
Income Driven Repayment Plans Lower monthly payments according to income
Loan Refinancing Get lower interest rates from a private lender
Side Jobs or Gig Work Make additional income to continue loan payments
Last Words
Student loan deferment and forbearance are useful short-term solutions for struggling borrowers But interest accrual and longer repayment periods can add up to higher overall loan costs Borrowers should take all options carefully and consider alternative repayment plans before seeking deferment or forbearance