Deferment and Forbearance of Federal Consolidation
Consolidation of student loans is often a last resort for former students. Most people take the step as a result of being unable to repay the loans according to their monthly installments as agreed in the loan contracts.
The monthly bills and living expenses may be so high that making installments on their student loans will exceed their financial ability. Unemployment is also a common reason former students choose federal consolidation. Regardless of the reason, if you are unable to make repayments on you student loans you can benefit from federal consolidation.
Sometimes when you have already consolidated your loans you will run into further trouble with finances, decide to re-enter school to get a higher degree or even finish the degree you may have discontinued. In any of these cases you will want to be relieved of the burden of your student loan repayments.
The last thing you need is to be worrying about paying for prior education while continuing it. In this case you can apply for a deferment or forbearance which will allow you discontinue your loan repayments for certain periods of time.
Deferment of Student Loans
When you plan to continue your education or have some financial problems, you have the option of deferring the payments to a later date as long as you are enrolled at least half time. Most federal consolidation lenders will allow you to keep your deferment options, if there are any that may be lost it will be written into your consolidation loan contract. The five deferment options are:
Enrollment Deferment – you can defer your loan repayments as long as you are in school at least half time at an eligible education program.
Graduate Deferment – if you are in a graduate program full time you can defer your loan repayments.
Rehabilitation Deferment – when you are enrolled in a program for rehabilitation or training that would keep you from full time employment you can defer your loan repayments.
Unemployment Deferment – as long as you are a job seeker but unable to get a job you can defer your loan repayment for up to 3 years.
Financial Hardship Deferment – is available to borrowers who have low incomes and can defer your loan repayments for up to 3 years.
Deferment vs. Forbearance
If you are unable to qualify for any deferments you may still be eligible for forbearance. The biggest difference between the two is that with deferments on subsidized loans the government pays the accrued interest. With forbearance the government will not pay the interest accrued.
Approval of Loans
Usually, the approval for deferment or forbearance comes quickly. It is important that you continue to make payments on the federal consolidation loan to keep your account from becoming delinquent or going into default. Once you have received the approval you can feel free to stop payments.
|
