Student Loans Deferment | Deferment vs Forbearance

A college education is expensive. If you were not able to get scholarships and grants, you more than likely used student loans to cover expenses. Unfortunately, when you finish college, you may not always find a good paying job right away. Depending on the amount of student loans, it could take years to pay the loans off in full. With job layoffs and other financial mishaps that life often brings, many people struggle to maintain loan payments. If you are struggling to pay your loans, you may qualify for student loans deferment.

Qualifications for Deferment of Student Loans

Deferment simply means that while certain conditions exist you may not have to make repayments on your loan. However, repayment will start again as soon as the conditions which give rise to deferment no longer exist and, in the meantime, your loan will still accrue interest. For example, if you decide to return to college to further your education, you will qualify for student loans deferment until you complete college.

If you are experiencing economic hardships of if you are unemployed, you can request to have your loan payments deferred. Deferment is a simple process and you can contact the loan holder for information on how to defer student loans. The process usually requires you to complete a simple application requesting deferment. You will be notified if you meet the requirements for deferment. We must mention here that it is possible to be denied and it is important to request deferment before you are in default of the loan. The moment you realize you may not be able to meet your obligation, you should apply to have your loan deferred.

The guidelines for federal student loan deferment differ from private student loan deferment. If you have private student loans, you will need to contact the lender or review your terms and conditions to determine the requirements. With private lenders, there may be additional fees to defer your loans.

Choosing Deferment or Forbearance

Your loans can be deferred for up to three years if you are unemployed. If you return to school, the loans will be deferred until you finish school. The clear difference between student loan deferment vs forbearance is the amount of time your payments can be deferred. If you request forbearance of your student loans, you payments can be deferred for a maximum of one year. If you have defaulted on your loan, you can still request forbearance on Federal student loans.

You may be granted forbearance on your loans if you can demonstrate the following conditions:

• Unexpected personal problems that affect your ability to pay
• Inability to pay within the repayment term
• Payments exceeding 20% of your monthly income
• Illness or overall poor health

If you have private student loans, you will need to contact your lender to make arrangements. Most private student loans will not provide the option of forbearance but you may be able to negotiate a more feasible payment plan with your private student loan lender.

Whether you choose student loans deferment or forbearance, you must consider that the interest will still accrue and, if you have a large amount of student loans, this interest can be significant. We recommend you make the interest payment each month. This will prevent your balance from increasing and will make repayment manageable. Many people with student loans do not realize interest deferred student loans still accrue interest. The payment is deferred temporarily; however, this payment includes the interest charge.

The deferred interest student loans will increase the balance of the loan over time. If your student loan is deferred for a short time, the interest will not increase your balance significantly. However, if you return to college and your payment and interest are deferred for an additional two or three years, this will increase your balance significantly. We recommend you pay the interest whenever possible. Most student loan lenders will also recommend you attempt to make interest payments while your loan is in deferment.

If you have multiple student loans and you are struggling with the monthly payments, we recommend consolidating your loans. This may reduce your overall monthly payments. In addition, you will have one payment instead of two or three payments. This may help you avoid defaulting on your loans and a may allow you to keep up with your payments.

Requesting student loans deferment or forbearance may be your only solution if you are experiencing financial difficulties. However, deferment and forbearance are better options than defaulting on your loans. In the long-term, keeping up with the interest payments will keep your loan debt from increasing. Before making a decision, make sure you review all available options including loan consolidation. If you choose deferment or forbearance, attempt to pay on your student loans whenever you are able. This will prevent your balance from accumulating to an amount that you are unable to pay. In addition, you must consider the time limit you have to pay your loans. Federal student loans for instance must be paid within 10 years.