Student loan debt is a growing problem in the United States, with millions of borrowers struggling to repay their loans each year. One option available to borrowers who are having difficulty making their payments is student loan forbearance. In this guide, we’ll explain what student loan forbearance is, how it works, and how to apply for it.
What is Student Loan Forbearance?
Forbearance is a temporary postponement of loan payments that allows borrowers to temporarily reduce or even pause their monthly payments. This can provide much-needed relief to borrowers who are having trouble making their payments due to financial hardship, unemployment, or other reasons.
How Does Student Loan Forbearance Work?
When you apply for forbearance, your lender will review your application and determine if you qualify. If you do, they will grant you a forbearance period, which can last up to 12 months at a time. During this period, you will not be required to make payments on your loans. However, interest will continue to accrue on your loans during this time, which means your loan balance will increase.
Types of Student Loan Forbearance
There are two types of student loan forbearance: mandatory and discretionary. Mandatory forbearance is granted by your loan servicer when you meet certain criteria, such as serving in a medical or dental internship or residency, serving in the National Guard, or working in a public service job. Discretionary forbearance is granted at the servicer’s discretion, usually based on financial hardship.
Eligibility for Student Loan Forbearance
To be eligible for student loan forbearance, you typically need to be experiencing financial hardship or other extenuating circumstances that make it difficult for you to make your loan payments. This may include situations such as unemployment, a reduction in income, or a medical emergency.
Applying for Student Loan Forbearance
To apply for forbearance, you’ll need to contact your loan servicer and provide them with information about your financial situation and the reasons why you’re requesting forbearance. You’ll also need to provide documentation, such as proof of income or a doctor’s note.
It’s important to remember that forbearance is only a temporary solution and should not be used as a long-term solution to repaying your student loans. It’s also important to remember that the interest on your loans will continue to accrue during the forbearance period, which can increase your loan balance.
Conclusion
Student loan forbearance can be a valuable tool for borrowers who are struggling to make their loan payments due to financial hardship or other extenuating circumstances. If you’re having trouble making your loan payments, it’s important to explore all of your options, including forbearance, before falling behind on your loans. By understanding the basics of student loan forbearance and how to apply for it, you can make an informed decision about whether it’s the right option for you.