Sometimes things happen in life that make it difficult to pay your student loan bills on time. This includes job loss, illness or economic hardship. If you are in a situation where you can’t make your monthly payments due to unexpected events, you may be eligible for deferment or forbearance. Both of these repayment options allow you to temporarily postpone paying off your student loans.

 Student Loan Deferment

Deferment plans allow you to delay payment of both the principal and interest of your student loan. You don’t have to make payments during the deferment period, but interest does continue to accrue.

Different deferment plans have different criteria for eligibility. If you lost your job, suffered extreme economic hardship, enrolled in school half-time or more, or are in active military duty, you might be able to defer your student loans.

Upon deferring loans, the federal government will pay all interest that accrues on your subsidized loans during the deferment period. But you will still be responsible for interest on unsubsidized loans (in addition to the principal balance).

Student Loan Forbearance

Forbearance plans might be the next best option if you don’t qualify for deferment. They are generally utilized specifically in cases of illness or financial hardship and ultimately increase the amount of your loan.

Under forbearance, interest accrues for both subsidized and unsubsidized loans and you are responsible for paying all interest plus the principal balance after the forbearance period. Interest payments do not need to be made while under forbearance, but will be added to the total owed once the period is over (after a maximum of 12 months).

Forbearance plans are offered in two ways:

  • Discretionary: The lender chooses to grant forbearance for financial hardship or illness.
  • Mandatory: The lender is required to grant forbearance for borrowers in certain situations, such as serving a medical residency or internship, holding a national service position or working as a teacher.

Contact one of our student loan counselors to see if you might qualify for deferment or forbearance.