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Forbearance On Student Loans – How One Qualifies

November 19, 2011

Forbearance On Student Loans

forbearance on student loans

The act of forbearance on student loans is essentially when you get to postpone or lower your loan payments for either a small amout of time to up to a year or more, if you fit certain requirements, which mostly have to do with the individual encountering financial hardship. During this time, it is likely that one will receive notifications that they must pay interest on their loans only, or let it accrue, or in other words pile up, which if one chooses to allow the interest to accrue, the funds will be capitalized. Student loan forbearance is applicable on both federal as well as private student loans, if you meet certain criteria which is discused directly below.

Requirements For Forbearance On Student Loans

Depending on your lender and other encompassing factors, requirements needed to qualify for forbearance vary, but below are some of main aspects in individual must meet in order to qualify for student loan forbearance.

  • Loan Forgiveness Programs – If you are participating in a program that has you working a job in a low income area, like the Teacher Loan Forgiveness Program. This is applicable to student loan forbearance, as often times these jobs will come with lower salaries.
  • In school – If you are enrolled in school or residency in a schedule that is half time or more, you qualify forbearance on student loans.
  • Financial Burden – If the individual applying for student loan forbearance have student loan payments that are equivalent or higher than 20 percent of their monthly income, they can qualify.
  • Community Service – If you are serving in community service programs, like VISTA, Peace Corps or Americorps, the opportunity for loan forbearance on student loans is possible.
  • Unemployment – If you lose your job and are actively searching for another one.
  • Partially Disabled – If one becomes disabled for a certain amount of time, but is not permanent, and results in them not being abe to work for an extended period of time.
  • Serving – If you are serving in a national service position.
  • If a parent has taken out a loan, and their child is experience financial problems resulting in difficulty in paying off loan debt, parents can inquire through their lender about using forbearance for their situation.

The first thing to do if you are considering forbearance on student loans due to the fact that you are having trouble making your payments, is to contact your loan lender and discuss your situation, as often times they will help you so your debt payments can better suit your situation. Forbearance of student loans should be a last resort, and should be considered after using other alternatives like student loan deferment which can be used for situations like unemployment, financial problems as well when one reenrolls in school, or using the Income Based Repayment (IBR) plan, which is a repayment method offered to those paying off federal loans, and allows one to pay 15 percent of their monthly income, where payments can be as low as 5 dollars per month.

If you have exausted all of the other options, forbearance on student loans can be used as a way to avoid things like defualt and delinquency, which all will have negative effects on your credit score among other things.