Understanding Deferment & Forbearance:
What You Need to Know
How borrowing from the US Government
differs from private loans.
In addition to offering relatively low interest rates, borrowing from the US Government to help pay for college offers two student loan and student loan consolidation repayment options that don't apply to private or conventional loans: deferment and forbearance.
During both deferment and forbearance periods, interest continues to accrue on your loans. This interest will be added to the amount you owe and must be repaid when payments resume. The only exception is for subsidized Stafford loans.
These options can help you avoid being delinquent or in default of your loans. In fact, if you qualify, deferment provides a way for "Uncle Sam" to help pay interest!
Student Loan Deferment
A deferment means you may postpone making payments on your loan under certain specific conditions.
However, you are responsible for the interest charged on all other federally-guaranteed student loans during a deferment period. You may either pay the interest as it accrues or allow it to accumulate and be capitalized when the deferment period ends.
Hot tip: If you qualify for deferment, the Federal government pays the interest charged on all subsidized federally-guaranteed loans during a deferment period.
At SBS, you are eligible to defer, or postpone, payment on your consolidation loan while you are:
- Enrolled at least half time at an eligible school
- Engaged in a full time course of study in a graduate fellowship program
- Engaged in a full time rehabilitation training program for individuals with
disabilities (if the program is approved by the Department of Education)
- Conscientiously seeking, but unable to find, full-time employment (up to
three years)
- Experiencing an economic hardship as determined by federal law, including
service as a Peace Corps volunteer (for up to three years)
Click here to download the loan deferment form that best meets your qualifications.
Student Loan Forbearance
If you're having difficulty making your loan payments in a timely manner, you may qualify for a loan forbearance.
Your servicer may allow you to reduce your payment amount, extend repayment length, or temporarily stop making payments if you apply for forbearance. However, a forbearance is granted at the discretion of your servicer, and you may be asked to provide reason or documentation to prove your eligibility. You remain liable for the interest that accrues on the loan during the forbearance period.
A forbearance can be granted if you:
- Are serving in a medical or dental internship or residency
program, if you meet certain criteria.
- Are serving in a national service position for which you receive a national
service education award under the National and Community Service Trust Act of
1993.
- Qualify for partial repayment of your loans under the Student Loan Repayment
Program, as administered by the Department of Defense.
- Have a monthly debt burden for Title IV loans that collectively equals or
exceeds 20% of your total monthly gross income.
Click here to download the loan forbearance form that best meets your qualifications.
Not sure if you qualify? Have questions about student loan deferment vs. forbearance? Call us at 1-866-652-2121 or use our handy Contact Us form.
How to Get the Pre-July 1st Interest Rate After the Deadline!
According to the U.S. Department of Education, if you have "substantially completed" a student loan consolidation application prior to July 1, 2006, you may still qualify for the lower pre-July 1 interest rate, even at this late date!
CURRENT STUDENT LOAN CONSOLIDATION
INTEREST RATES
Thursday, July 27, 2006
5.375% - 6.125%*
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