Read this if you’re panicking about making student loan payments and you are looking for temporary relief from student loan debt payments.

Estimated read time ~5 minutes.

Student loan deferment or forbearance can give you temporary relief from the financial stress of student loan payments. Here’s what you need to know to decide if these options are right for you.  

Deferment

Deferment allows you to temporarily stop making payments on your student loans. While in deferment the federal government pays the interest accruing on your subsidized federal loans. That means you don’t earn interest or compounding interest on those loans during your period of deferment.

In order to be eligible for deferment borrowers must meet specific criteria. You can find the comprehensive list and forms for each type of deferment here. In a nutshell you’re eligible if you’re still enrolled in school half-time, if you’re in grad school or fellowship, if you’re unemployed, if you’re experiencing economic hardship or in the peace corps, if you’re currently or were recently on active military duty for war, military operation, or national emergency.

Deferment is the ideal choice because you will never have to pay for interest accrued on subsidized loans during the period of your deferment. You can find the

Forbearance

Forbearance allows you to temporarily stop making payments on your student loans. While in forbearance interest continues to accrue and compound on all types of loans including subsidized.

There are two types of forbearance, general and mandatory. Forbearances aren’t granted for longer than 12 months so if you are still experiencing hardship or are eligible for mandatory forbearance after that you will need to re-request forbearance.

General forbearance is at the discretion of your loan servicer and can be granted for reasons such as financial difficulty, medical expenses, employer change, and other reasons suitable to your lender.

Mandatory forbearance is required to be granted by your loan servicer if you meet eligibility requirements. These requirements can be medical or other health-professional residency, total monthly amount of student loan payment is 20% or more of your gross monthly income, some teaching and americorps positions, some military and national guard situations

You can find the general forbearance request here.

Alternative repayment plans.

Do you really need to stop making payments on your student loans or is there other room in your budget to make sacrifices? Take a calm look at your finances and find out if a lower payment is really what you need rather than no payment. You can accrue a significant amount of interest in forbearance. Let’s look at 12 months forbearance on a $36,000 loan with 4.8% interest. Your loan balance after 12 months forbearance will be $37,728. That’s an extra $1,728 you now owe and 4.8% relative increase in the cost of your education. Choose wisely, income-based payments also allow you to work toward eventual loan forgiveness after 20-25 years of payments.

Let me know what your biggest fears are about student loan repayment in the comments below, on the Repayable Facebook Page, or by sending me an email jeni@repayable.org. I’m here to help. With the information you need, you can make your student loans truly repayable.

Additional Resources:

Deferment and Forbearance 

Deferment Eligibility 

Forbearance Request Form