Understanding The Difference Between Forbearance and Deferment
There is often confusion between federal student loan debt relief forbearance and deferment programs. Because both programs postpone scheduled payments debtor confuse them as the same program.
In order to be eligible for deferment, a postponement of federal student loan payments, a debtor must be:
- A full time student in a graduate or fellowship program
- Enrolled at least half-time in an eligible post-secondary school.
- In an approved disability rehabilitation program
- On active duty in the service with the Army or National Guard
In most instances, a deferment request must be made to the loan servicer along with documentation proving eligibility has been met. For those students who have gone back to school at least halftime, the enrollment process will automatically place the loans in deferment. You will be notified of the deferment status.
Any person who is in default on their loan will not be eligible for either a deferment or forbearance. You will have to set your loans right by making payments in order to be eligible for student loan debt programs.
For those people who cannot afford their scheduled student loan payments but do not qualify for deferment, a forbearance is the next best thing. You will temporarily be relieved of loan payments, temporarily make smaller loan payments or extend the time to make a payment. All options work in your favor as far as keeping your debt out of default.
Common reasons for requesting forbearance are:
- Financial hardship
- Serving in a medical or dental residency
- Refer to your loan servicer for more examples.
You may be given an automatic forbearance under certain circumstances: processing a forbearance or deferment, cancellation, changing payment plan, consolidating or if put on active duty in the military.
Interest payments are often paid by the federal government during loan deferment. It saves debtors lots of money, but in order to receive this additional college loan debt help, the loans must qualify. The government may pay the interest for Federal Perkins Loans, Direct Subsidized Loans and/or Subsidized Federal Stafford Loans. If your loans are unsubsidized, your interest will not be covered by the government. Instead, interest will be added onto the total loan amount, building up the total loan amount each month.
If you are hoping to get into a loan forgiveness program, you will be required to make payments. Instead of looking at a forbearance or deferment for federal loan debt relief, you may want to consider a income-based relief program. These relief programs will work towards the 120 mandatory payments quite affordable.
Before you do anything, find out what help programs you loans qualify for. Income-based programs are extremely helpful in getting a head start on expected loan payments. Find out what your payments may be in one of these relief programs before you sign up for deferment or forbearance. Student loan relief services offer a free consultation for you to understand the proper direction to take in order to be eligible for student loan debt help.