If you don't qualify for a student loan deferment but could benefit financially from postponing your payments, you may be able to ease your financial burdens and find debt solutions with a student loan forbearance. Such a plan allows you to temporarily stop making payments or reduce the amount of your monthly obligation for up to a year.
Types of forbearance
Two types of forbearance situations exist -- mandatory and discretionary. Which type you may qualify for depends on your financial and personal situation.
A mandatory forbearance must be honored by your lender. You are eligible if the total of all student loans you owe is 20 percent or more of your monthly gross income. You may also get a mandatory forbearance if you are in a medical or dental internship or residency program, received a national service award and are in a national service position, are teaching and qualify for teacher loan forgiveness, are a member of the National Guard and activated by a governor, or you qualify for partial repayment under the U.S. Department of Defense Student Loan Repayment Program.
A discretionary forbearance is up to your lender. Eligible reasons include financial hardship and illness.
Unlike a deferment, interest continues to accumulate on all types of student loans during forbearance. If possible, pay the interest during forbearance, because if you don't, your lender may add it to your principal balance, which can make your payment higher once you resume payments.
Requesting a forbearance
In order to be considered for a forbearance, you need to apply for one with your lender, which will require that you fill out certain forms. But if the circumstances are right and you are eligible for a forbearance, taking a break from your student loan repayment may offer just the leg up you need to get a handle on your debt management.
About the Author:
Julie Bawden-Davis is a Southern-California-based writer specializing in personal finance and insurance. Since 1983, her work has appeared in a wide variety of publications, including Family Circle, Ladies' Home Journal, Parenting, Entrepreneur and The Los Angeles Times.