Student Loan Delinquency

Student loan lenders provide a variety of repayment programs that offer you assistance with various financial circumstances. The ultimate goal: to make sure you have flexible choices when it comes to student loan repayment. No one benefits when you default on loans.

Delay or postpone student loan payments under certain circumstances in one of two ways: loan deferment or forbearance.

Forbearance vs. Deferment

During forbearance you are responsible for paying the loan interest that accrues during the period of delay. Forbearance may also allow you to make smaller loan payments for a certain period of time, as well. During deferment the interest on any subsidized loans is not accrued.

Popular reasons to pursue forbearance include:

• You’ve already used up deferment options.
• Your financial situation does not make you eligible for loan deferment.
• You can prove a term of financial hardship.

Remember: Lenders are quite willing to work with you if you are having financial difficulties making student loan payments. There are a couple of other options besides loan forbearance: you might also evaluate your eligibility for loan consolidation or loan deferment, or change the type of loan repayment plan you initially chose.

**Tip: Federal school loan laws have changed since June 1, 1993, many that involved student loan repayment options. Always contact your lender or student aid officer for the most up to date information.

When Forbearance Makes Sense

Besides general economic hardship, student loan forbearance on your federal Stafford Loans may be mandatory in a few situations. Always contact the program or lender directly, ask for appropriate forms and fill them out completely.

• Teacher Loan Forbearance--Teachers, if you have borrowed student loans after July 1, 1993 and currently are eligible for the Teacher Loan Forgiveness program, check with the Federal Student Aid program for further details on your eligibility for this forbearance.
• If you’re a med student and entering residency you are eligible for forbearance and sometimes loan deferment. During this period chances are likely you have entered loan repayment, are now faced with astronomical loan payments, but your income is typically so much lower that you automatically qualify for economic hardship status.
• Serve with AmeriCorps and make sure you find out how you can declare a period of forbearance on your loans. Ask your Direct Loan or FFELP lender.
• If you serve in a military capacity, you also may qualify for forbearance. Again, always check with your lender.

Lender Options for Repaying Private College Debt

Under the federal loan program you have plenty of options for loan deferment or forbearance, but what about private student loans? Most private and non-profit organizations provide forbearance options if you qualify. Lenders differ widely, so expect a variation of criteria for private loan forbearance. Allow yourself plenty of time for applications to be processed and remember: until you’ve been approved you must still make regularly scheduled loan payments.

Parental Student Loan Deferment

If you are a parent and are paying on a PLUS Loan while a child is in college and you experience a financial problem with loan repayment you may be able to apply for a loan forbearance. Check with your lender for details.

As you can see forbearance rules are more subjective than those for deferment. The best advice is to go directly to your lender and ask about your eligibility for loan forbearance. Always pursue alternative repayment plans and avoid loan default at all costs.