Most students who deal with student loans would consider repaying student loan debt to be a daunting process. Seldom do you have enough money to repay the loans and start afresh when you are fresh out of college? If you find yourself in this situation, consider using the deferment and forbearance options to simplify your loan situation.
What is Student Loan Deferment?
A student loan deferment is a way of delaying your payments on student loans. During the deferment period, the interest on your subsidized loans does not accrue. A deferment allows you to either reduce the total loan repayment amount you have to make or stop making payments for three years. You can use a student loan deferment calculator to determine how much interest will accrue when you defer your student loans. You can qualify for a student loan deferment if you find yourself in the following situations:
- If you are still in university
- If you are experiencing economic hardship
- If you are serving in the army
- If you do not have a stable source of income
Are you eligible for a Student Loan Deferment?
Here are the eligibility criteria for private and federal student loan deferments.
Private student loan deferment
If you want to defer your private student loans, you will have to contact your loan vender because the deferment terms vary with each vender. Therefore, you may be able to get your hands on a deferment, depending on the lender, if you happen to be enrolled in the army, are in school, or employed.
Federal student loan deferment
If you want to defer your federal student loans, you will have to apply. You may be able to automatically avail an in-school loan deferment if you can enroll yourself in school half-time. However, you need to ensure you verify with the U.S. Department of Education. Find the student aid repayment forms, click on deferment and apply based on the deferment you want and are eligible for.
What should you consider before Deferring your loans?
Here are some things to keep in mind before you decide to defer your student loans:
Do you have Perkins loans or subsidized federal loans?
Student loan deferment can help you if you happen to have a subsidized loan because the interest on such a loan will not accrue during the deferment period. However, you can expect the interest to accrue on unsubsidized loans.
Can you lower your repayment?
It is a good idea to check if you can afford to make reduced payments. If that is in the cards, an Income-Based Repayment (IBR) plan may be right for you. However, deferment is your solution if you are desperately looking for a break from payments. In other words, use it as a last resort.
Your chances of resuming your payments soon
Deferment can make for an excellent short-term solution. In other words, you can expect it to work if you happen to have a temporary financial setback. However, you are better off without a student loan deferment if you do not see yourself starting to make your repayments once again.
Student Loans Forgiveness
Student loan forgiveness is an increasingly popular option that students with loan debts seem to go for. Given how students are struggling to repay their loans once they come out of school, it is not surprising that they are looking for a way out, and student loan forgiveness is one of them. There are a plethora of student loan forgiveness programs at your disposal.
Student Loan Forgiveness Programs
As mentioned earlier, you have plenty of choices for student loan forgiveness. Here are a few main ones:
Teacher Loan Forgiveness
If you are a full-time teacher and have completed five consecutive academic years in a school or an educational service agency that pays a low salary and meet a few other requirements, this forgiveness program will allow you to avail forgiveness of an amount up to $17,500 on your direct subsidized and unsubsidized loans, and your subsidized and unsubsidized federal Stafford loans.
Loan Forgiveness Due to Bankruptcy
You can avail this forgiveness program for Perkins loans and direct loans. If you file for bankruptcy, you can get your student loan discharged automatically. However, this will significantly affect your chances of applying for any kind of loan in the future. You will have to build your credit score from ground zero.
Total and Permanent Disability Forgiveness
You can for this forgiveness program if you have a direct loan or Perkins loan. This forgiveness program helps those who cannot afford to repay their loans due to a disability. You may get your loans discharged if you happen to be a part of the Teacher Education Assistance for College and Higher Education (TEACH) initiative.
Public Service Loan Forgiveness Program
The Public Service Loan Forgiveness (PSLF) is one of the most commonly used loan forgiveness programs. This program was put in place to help students who have financial problems and trouble repaying their loans.
This program specifically helps those who serve in fields like administration, teaching, nursing, military, and others in the public sector.
If you want to find out how much of your student loans can be forgiven, be sure to use a public service loan forgiveness calculator.
As a borrower, you should have made repayments on your loan for a minimum of ten years if you want to opt for this student loan forgiveness program.