Student Loan Deferment Or Forbearance

I attended a presentation on student loan debt by attorneys from the Department of Justice, who fight discharge of student loans in bankruptcy cases, but  presented lots of information on other ways to deal with repayment.

A frequent theme was:  contact the ombudsman!

The Federal Student Aid Office has on office to identify your loan repayment options, resolve discrepancies over payments made and balances owed on loans, clarify student loan deferment, forbearance, and even discharge options, among other things.

The government lawyer actually said that, if you die, you do not have to repay, but, you do have to file some forms to get the discharge.

Your first question may well be: which loan program am I in?

You have to know that before you can find out your options.

Perkins loans, William D. Ford direct loans, Higher Education Act, Federal Family Education Loan Program, Federally Insured Student Loan Program, Stafford loans, PLUS loans and more.

Oddly enough, student loan deferment or forbearance are only available for loans NOT in default.

If you default, your loan can be rehabilitated, or re-financing or consolidated, which brings the loan back out of default status.

So, if you can’t pay your loan, best to figure that out before you fall behind on the payments.

Deferment is a suspension of your obligation, nothing goes away, but your payments stop for a time.

Forbearance is a  modification of the payment terms, also temporary.

An example of the differences in how the different loan programs are treated: for deferments for government subsidized Stafford loans, the government pays the interest that accrues during the time of the deferment.

The qualifications, time periods, information required to be submitted, all vary according to which program, or programs, you are in.

If you are like most of my clients, you do not know.

So, as the government lawyer says, contact the ombudsman!

Before you miss a payment.


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