If you are a student loan holder, you may wonder how to get a forbearance. A forbearance is an agreement between the lender and borrower where the lender agrees to postpone or suspend payments for some time.
The most important thing to ask when looking at your alternatives for forbearance is: Are your student loans federal student loans or private student loans?
Suppose you have a legitimate reason, such as if you’re in financial difficulty, you may request to be placed into forbearance by contacting your loan servicer. There’s a lengthy application procedure, and you’ll need to submit paperwork and possibly provide documents in support. If you’re approved, you’ll be able to put off making loan repayments for 12 months.
What is a student loan forbearance, and how does it work?
The government gives out annual forbearance for 12 months at a time. During this time, you have the option to make no payments or smaller payments. If you think it will be challenging to make your loan payments at the end of a year, you can re-apply for another 12-month forbearance with a possible three-year extension in total throughout your loan.
What is Public Service Loan Forgiveness?
Public Service Loan Forgiveness is a government program for certain student loan holders. It’s beneficial if you have a public service job or are in the military, and it can forgive part of your federal loans after 120 payments (that is, ten years).
What are the types of Student Loan Forbearance?
There are two types of forbearance: mandatory and discretionary. Mandatory is when you have no money left to make payments and need a break. Discretionary is for if your school has closed, you’re experiencing financial difficulty, or other exceptional circumstances.
How do I get a student loan forbearance?
The best way to apply for a student loan forbearance is by contacting your lender directly. You can also find more information on the Department of Education’s website.
What is Mandatory Federal Student Loan Forbearance, and What do I need to know?
Mandatory forbearance is reserved for specific situations. It’s not your loan servicer’s decision to accept or reject you for a particular program; if you fulfill the criteria for the program you want to participate in, your loan servicer must comply. However, you will still need to contact the company and complete an application.
Mandatory forbearance is a status where the student loan lender must grant you a period without payment.
Mandatory forbearances include the following circumstances:
* The borrower is providing volunteer services for a nonprofit organization
* Inability to make payments due to receiving unemployment compensation
* Physical or mental disability that prevents making full payment
How long is a forbearance period typically granted?
A typical federal student loan forbearance term lasts from six months to twelve months. The exact length depends on your lender though you are always allowed to pay off these loans during times of financial hardship too.
What are the types of mandatory forbearance?
AmeriCorps
AmeriCorps members typically serve one-year terms and aren’t paid much during that time. However, if you meet the requirements, you can put your student loans on hold by filling out a simple form that may be located on your AmeriCorps member page.
Medical or dental internship or residency
If you’re a health professional enrolled in a training program but don’t qualify for student loan deferment, you may apply for this forbearance option. However, keep in mind that while you are not making payments on your student loans, they will continue to build interest. In addition, because medical and dental school financing can be enormous, forbearance may cause your total loan amount to grow.
Department of Defense student loan repayment program
If you’re a military member who takes out federal student loans and agrees to a four-year service commitment, your loan servicer will waive interest on your loans during training. This is only for active members with no provision for reservists or National Guard soldiers.
National Guard duty
Only graduates of VA or DVA-accredited educational institutions who served in the United States military and received an honorable discharge may apply regardless of their branch. However, you can only qualify for this type of deferment if you do not already qualify for a military deferment.
What is Discretionary Student Loan Forbearance, and What do I need to know?
Discretionary forbearances are those in which you must meet specific criteria for your loan servicer to grant you the status. In addition, you will have to apply supporting documentation, such as medical bills or proof of death in the family.
Discretionary forbearances include the following circumstances:
- You are experiencing financial difficulty beyond your control and won’t make payments for some time. Your loan servicer will determine how much longer you can have debt postponed on this basis.
- Another type of discretionary forbearance is needing extra help because of a service-related injury. Your loan servicer will determine the length of time you can have your debt postponed under this status based on evidence that you’re unable to work or earn enough money due to an accident resulting from your military duties. You must also prove that there is no way for you to pay off the loans now or in the future.
- If your degree is in an area experiencing a shortage, you can apply to have your student loans postponed for up to three years (this will take effect once six months of unemployment passes). You’ll need documentation proving that there are no job openings within 100 miles of where you live or work and proof that this circumstance is beyond your control.
You can also apply for a three-year forbearance if you’re enrolled in an approved graduate program and are working toward completing the program or have recently completed it. Your loan servicer will determine whether to grant this type of forbearance based on evidence that there’s no work available within 100 miles of where you live or work in your field of study.
What are the Student Loan Forbearance Costs?
As with deferments, interest will continue to build on your student loans during forbearance periods. Generally speaking, the longer a forbearance lasts and the more money you owe on your loans when it begins, the higher your total payments for that period are likely to be.
It’s usually better (though not always) to choose a deferment when you qualify for one. However, it’s better to get your student loans deferred if possible.
Sometimes forbearance is the only option available to you. If this is the case, it’s essential to work with your loan servicer and manage your student loans responsibly so that you don’t end up in even more debt than before.
For example, if you have federal Stafford Loans or Grad PLUS loans (also known as Parent Loan for Undergraduate Students or PLUS loans), you can contact your loan servicer directly to request a forbearance. You will have to provide the necessary documentation for proof of financial difficulty and other circumstances that qualify you for this status.
If you’re having trouble making payments on private student loans (or any type of debt in general), it’s essential to know that resources are available to help you.
What is Private Student Loan Forbearance?
Private student loan forbearance is when your lender allows you to stop making payments for a set period. Unlike federal loan borrowers, private student loans will not be eligible for an interest-free forbearance.
Private student loans may or may not have an option to postpone payments, and the rules vary among lenders.
What do I need to know before filing for Private Forbearance?
Deferment or forbearance are forms of postponement that allow you to stop making payments temporarily. You may eventually owe the new interest charges whether you pay them or not, as long as you postpone payments. You must apply to your loan servicer for forbearance or deferment and make payments until you’re notified that it’s been granted.
How does interest work during forbearance periods for both federal and private loans?
Federal Student Loan Forbearance
Interest is typically capitalized, meaning added onto your total balance at times of nonpayment and deferred payment status (the latter of which will add unpaid interest into the full balance of your loans and increase your payments in the future).
Private Student Loan Forbearance
Accrued interest will continue to rise when you are not making regular monthly loan payments.
What is the difference between private and federal student loans when requesting forbearance?
Federal Student Loans usually allow you to apply for an extension on payments through either Mandatory or Discretionary forbearances.
Private Educational Lenders usually only provide mandatory periods where payments stop collection activity but don’t need to grant discretionary ones. This means your borrower rights depend on the type of student loan you have, as well as who is servicing your loans.
Who qualifies for a student loan forbearance?
Federal student loan borrowers can qualify for forbearance under the Federal Direct Loan Program, FFEL, and Perkins Loans. Private Educational Lenders have their own rules, which vary by lender but usually mirror those of federal loans regarding eligibility requirements. You must apply directly with your lender for a private educational loan forbearance period. For
How to apply for a student loan forbearance?
If you’re a Federal student loan borrower, contact your servicer to request an extension on repayment. Private Educational Lenders require that you complete the application process with them directly to receive forbearance.
You should also check the terms of your credit agreement before applying for forbearance, as it is possible that they will not approve this type of request.
What are the steps to take if you’re denied a student loan forbearance?
If you are denied a student loan forbearance, ask your servicer to explain why. You can also file an appeal or re-apply with the company.
If they still deny your request and you feel that it was done in error, contact their ombudsman office (if available) about submitting another application. If this doesn’t work, consider other student loan repayment options.
How to avoid getting denied for a student loan forbearance?
Unfortunately, there is no way around this process, and you can only hope that your servicer approves your request. If you are denied a private student loan forbearance, they may ask why or require additional information to make a decision.
There are several reasons you might be denied forbearance, and this is where understanding the difference between your federal student loans versus private ones becomes essential.
What does all of this mean?
It means that there’s no simple answer to how long it will take to receive a deferment or forbearance or even to get it approved. It also means that you should always check the terms of your credit agreement before applying for forbearance, as they may not support this type of request.
It is important to remember that student loan holders need to apply directly with their servicer when requesting a deferment or forbearance on federal loans and complete the application process with them instantly to receive forbearance.
It means that if you are denied an extension on repayment, ask your servicer to explain why or file an appeal or re-apply with the company.
If they still deny your request and feel that it was done in error, contact their ombudsman office (if available) about submitting another application. If this doesn’t work, consider looking into other student loan repayment options and avoiding getting denied for a deferment or forbearance again.
What types of loans qualify for the Student Loan Forbearance Program?
Federal Direct Loans, FFEL, and Perkins loans. Private Educational Lenders have their own rules, which vary by lender but usually mirror those of federal student loans regarding eligibility requirements.
You must apply directly with your lender for a private educational loan forbearance period.
What are the other ways to lower your monthly payments or avoid late fees on your loans?
Some Private Educational Lenders allow you to change your repayment plan to be more affordable. You can also try refinancing with another company and transferring the balance of your loan over to them, which might also lower your monthly payments.
What are the Pros and Cons of Student Loan Forbearance?
There are several pros to this, such as having time to find new employment or reorganizing your finances. The option of deferment also has its advantages, but you might not qualify for it depending on how much money you owe and when your Stafford subsidized loans were taken out.
The cons include that forbearance can be costly and that you cannot consolidate your loans through this process. It’s also important to note that forbearance is not available for all types of student loan balances, so it may be necessary in some cases to explore other repayment options instead.
Student loan forbearance can significantly impact your credit score, especially if you’re using forbearance to avoid making payments. However, it can also end up costing you more in the long run if done for an extended period, so it’s essential to weigh your options before applying.
