Student loan deferrment

There are a number of students who are unable to make payments towards one or more of their federal student loans. If you are also facing a similar situation then do not panic you can opt for a student loan deferment.


Defaulting on your student loan can mean, spoiling your credit report, increasing your loan balance, paying collection fees, etc.Before you default on your student loan and end up marring up your credit report you should understand what is student loan deferment and how can you take advantage of it.


What if you are unable to pay student loan

When you are unable to make payments towards your student loan then you can have different options, which include:


  • Postponing payments with the help of deferment or forbearance programs

  • Eliminating the loan with a loan cancellation

  • Getting the loan discharged in bankruptcy

  • Taking up a an income-sensitive or income-contingent repayment plan,

  • Consolidating different loans into one loan.
  • However, here we will be focusing on the student loan deferment program.Let us understand what is student loan deferment and how can you opt for a deferment.


    What is student loan deferment?

    A student loan deferment helps you in postponing your student loan payment.The student loan deferment is based on certain conditions, which can include :economic hardship, returning to school, or being unemployed and seeking employment. These can help you in excusing yourself for making payments for a specific period of time.


    In some types of loan the principal as well as the interest can be deferred.In this period the loan balance would not increase as the interest is also deferred. In some loans you can only opt for deferring the principal and during that time period the interest keeps accumulating on the loan.The type of deferment that you can opt for depends on the type of loan that you have taken.


    Conditions for deferring the loans

    You can opt for student loan deferment under the following conditions:


  • Death of the borrower

  • In case of permanent or total disability

  • Temporary total disability

  • Enrollment in rehabilitation program for the disabled

  • Unemployment

  • Economic hardship

  • Enrollment in school

  • Membership in a uniformed service

  • Graduate Fellowship Program Deferment

  • Parental Leave Deferment

  • Peace Corps Deferment

  • PLUS Loan Student In-School Deferment

  • PLUS Loan Student in Rehabilitation Deferment

  • Public Health Service Deferment

  • Tax Exempt Organization Deferment

  • Teacher Shortage Area Deferment

  • Working Mother Deferment
  • Apart from these conditions one of the main factors that allow you to take up student loan deferment is that you should not have been in default which means that you should have been making all your payments on time or you can be in the grace period after the completion of your graduation or you have been given other forbearance or deferments.


    How to get a student loan deferment

    Your student loan cannot enter a deferment on itself. You are supposed to apply for it. To get a deferment you are supposed to complete the full paperwork as given by your loan holder to you. Once that you have submitted your request you should keep a follow up on it so that you are sure that it is going on track.Though this can seem to be a bit lengthy and tiring but getting deferment can help you get enough time to arrange for finances to make payments towards your student loan.


    You can start by getting in touch with your student loan holder.Explain to them the situation and tell them which deferment do you qualify for.Once that you have explained you situation they would give you the suitable form or will tell you from where can you obtain or download the form.It is important that the request be noted down so that in case your payments are due the lender does not bother you.


    Duration of deferment

    People often ask this question of how many times can they place their loan in deferment? Well for federal student loans the deferment duration is 36 months, which can be extended by 6-12 months increment. However for a private student loan there are different deferment durations and regulations that very from one lender to another.


    If you wish to apply for a deferment then it is suggested that you contact your lender at least 30 days prior to when you wish to get the deferment so that the process can be initiated and completed well in time.


    Another question that people have in mind is how will they get to know whether their request is granted or not.When you apply for a deferment the lender goes through your request and if you were granted the deferment then the lender would inform you in writing. It is however suggested that you keep your payment rolling in till the deferment is granted. When taking deferment it is suggested that you take in written and inform the lender about the loans that you have opted for deferment. In case you have multiple lenders with whom you wish to have your loan deferred then you are supposed to make individual requests to each lender.


    What if you are not given a deferment?

    In case you don't qualify for a deferment then you can opt for postponing your payments with the help of forbearance.When you take forbearance then the lender grants you permission to not make payments for a set period of time.However you are charged interested during that period on the principle loan amount. Though forbearance is not as attractive as a deferment but it can be easily obtained.


    If you wish to get a deferment then it is advised that you work in advance and speak to your lender personally so that you can start lining up things well in time.


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