Forbearance & Deferment
One of the most convenient features of a federal student loan is the ability to enter your loan into forbearance or deferment. This means that for a period of time, you are not required to make payments on your loan and you will not receive a penalty.
So what is a Forbearance or Deferment? Here’s what you need to know.
By filing a forbearance of a Federal student loan, the payments will either be stopped temporarily or reduced until you are past a financial hardship or other situation. During the process of forbearance, interest will still accrue during the times where payments are stopped or reduced. This applies to all loans, unsubsidized or not, including PLUS Loans.
As an agreement between yourself (as the borrower) and the loan servicer, the discretionary forbearance does not have to be granted. Hence the name, since it is at the discretion of the loan servicer.
In addition to other specific requirements, you can receive a mandatory forbearance through obtaining an internship in the medical or dental fields. If you take the amount of the income you gross each month from your employment and find 20 percent of that amount, you can receive a forbearance if the total amount of all of your Federal Student Loans is above that number. Some teaching duties that can be performed by a borrower can qualify a borrower for a mandatory forbearance through teaching loan forgiveness.
Much like forbearance, the definition of deferment is very straight forward.
No matter what type of loan you received from the Federal Government, you are qualified for in school deferment as long as you stay enrolled with at least a half time schedule. The Direct Loans, FFEL Loans and Perkins Loans are all available for this deferment.
Graduate Fellowship Deferment
To further the in-school deferment, you are also able to qualify for a deferment if you are enrolled in a Graduate Fellowship Program. This may depend on the program that you are currently in, as some medical internships and residencies are not able to have the student loans deferred. There are ways in which to qualify for this deferment. The program that you are in must provide financial assistance or support to allow the borrower to study full time for a time of at least six months.
Rehabilitation Training Programs
There are some specific requirements that you need to know about for the Rehabilitation Training deferment. First, the program that the borrower is in has to be a licensed and approved program through the VA or a state rehabilitation agency. Some of these include programs for drugs, alcohol and mental health.
If you have become unemployed while out of school or find yourself working less than a full time schedule of 30 hours per week, you may be able to qualify for the unemployment deferment.
The Military deferment comes about through a few different scenarios. If you are on active duty in the military or involved in duty with the National Guard in a time of war and or a military operation (as well as an emergency in the United States that requires an active duty of over six months) you can qualify for this deferment.
Economic Hardship Deferment
As the name states clearly, this deferment comes about when you are finding yourself in a time of financial difficulty. The maximum amount that the Economic Hardship Deferment can last for is three years.
Armed Forces Deferment
The Armed Forces Deferment is similar to the Military Deferment, as it covers the former students that are on active duty with any of the Armed Forces in America. This deferment, however, has a maximum time frame of three years.
Do you still have questions?
Give us a call today at 1-800-488-1490 to find out more about your specific loan structure, the programs that may be available to you, and how to potentially reduce your monthly payments and possibly have your federal student loan debt forgiven!
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