Student Loan Repayment Options: Deferment vs. Forbearance

All, Living Adventures, Preferred Movement     by Alissa Mir

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According to StartClass, an educational data site, the outstanding balance of the nation’s student loans is growing by an estimated $2,726.27 every second. It is evident that student loan debt is a serious problem in the United States, as it has now passed $1 Trillion. For anyone who has taken out student loans, understand that there are options to help relieve student loan debt.

Student Loan Deferment
Deferment: A postponement of payment on a loan that is allowed under certain conditions during which interest does not accrue on Direct Subsidized Loans, Subsidized Federal Stafford Loans, and Federal Perkins Loans. This is essentially a payment period during which repayment of your loan is delayed.

The Federal Student Aid lists those who are eligible for deferment on their website. Those who are eligible include students who return to school and are halftime enrolled in a university, active military duty, or people struggling to find employment for up to 3 years. Visit their website here to see the remainder of the list.

Student Loan Forbearance
Another option to relieve student loan debt is student loan forbearance. Forbearance allows you to stop making payments or reduce your payment for up to 12 months. The Federal Student Aid lists the circumstances which qualify students for this option here.

The two types of Forbearance are Discretionary and Mandatory.
Discretionary: under the circumstances of Financial Hardship and/or Illness, your lender decides if you are eligible for Forbearance.
Mandatory: under the circumstances listed here, your lender is required to grant forbearance.

You must make a request to your lender in order to be granted forbearance.

With both deferment and forbearance options, payments are delayed. The difference is with deferment, your interest on subsidized loans does not accrue. With forbearance, your interests will continue to accrue on unsubsidized and subsidized loans.

If you are a student with student loan debt, it may be smart to look at both options and see if you are eligible for either. In the end, this could save you a lot of money!


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