Deferment and Forbearance

There are many options available if you have difficulties making payments on your student loans. Most importantly, you will want to communicate your situation with the loan servicer as soon as it arises. This will allow the loan servicer to assist you with your loan before it is considered in default. Contact your lender directly to find out about options, which could include the following:

Deferment

A deferment is a period of time during repayment in which the borrower, upon meeting certain conditions, is not required to make payments. For subsidized Stafford loans, the federal government pays the interest during a deferment. For unsubsidized loans, interest accrues and is capitalized at the end of the deferment period, and the borrower is responsible for paying this capitalized interest. Types of deferment include:

  • In-School
  • Unemployment
  • Economic Hardship
  • Family Medical Leave Act (FMLA)
  • Armed Forces

Forbearance

Forbearance is a tool lenders can use to assist borrowers in meeting their loan repayment obligations. By granting forbearance, a lender permits a temporary suspension of payments. The lender may grant forbearance to borrowers only if they reasonably believe that the borrower intends to repay the loans, but is currently unable to make payments. Interest accrues and is capitalized at the end of the forbearance period, and the borrower is responsible for paying this capitalized interest.

  • Must be approved by your lender, either over the phone or through an application
  • Interest accrues on all loans and is capitalized
  • At most, forbearance is granted in 12 month increments
  • Maximum of 3 years