Deferment and Forbearance FAQ
What is a forbearance?
What is a deferment?
What types of forbearance and deferment options are available?
How many times can I place my loans in deferment or forbearance?
When should I apply for a forbearance or deferment?
How will I know if my request was granted?
Will I be responsible for interest during a deferment or forbearance?
|Q:||What is a forbearance?|
|A:||A student loan forbearance is an agreement between a borrower and the lender/servicer to temporarily postpone payments, extend the timeframe for making monthly payments, or reduce the amount of monthly payments on a short-term basis.|
|Q:||What is a deferment?|
|A:||A student loan deferment is a period of time during which payments are postponed. Deferments usually require documentation. There are different types of deferment for which borrowers can apply, such as in-school deferments or unemployment deferments.|
|Q:||What types of forbearance and deferment options are available?|
|Q:||How many times can I place my loans in deferment or forbearance?|
|A:||For federal student loans, you have 36 months worth of deferment request, in 6- or 12-month increments. There is no limit on the number of forbearances you can request. Private student loans have different rules. Contact your lender for details.|
|Q:||When should I apply for a forbearance or deferment?|
|A:||Contact your lender(s) at least 30 days before you want the deferment of forbearance to start to allow for processing time.|
|Q:||How will I know if my request was granted?|
|A:||Your lender will contact you in writing informing you of the decision. It is important to continue to make payments until your deferment or forbearance is granted. Submitting a request does not place you in deferment or forbearance status. Only a written letter from your lender is sufficient notice that your loans have been put into deferment or forbearance. Also, be sure to clarify with your lender which loans you would like to be put into deferment or forbearance or if you'd like to postpone payments on all your loans. If you have multiple lenders, then you must make a request to each lender.|
|Q:||Will I be responsible for interest during a deferment or forbearance?|
|A:||It depends on the type of loan. For subsidized federal loans, the government will pay any interest that accrues during the deferment or forbearance period. For unsubsidized loans, interest will accrue during the deferment period. You have the option to pay the interest while in deferment or forbearance or you can elect to have the interest added to the principal. Interest capitalization might work differently for private loans. It is best to contact your lender for details on interest capitalization during deferment or forbearance periods.|
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IRS Reminds Students of "Tax-Advantaged Education Expenses"
By Surajit Sen Sharma
On September 11th, the IRS news release "Back-to-School Tax Breaks Help Teachers Pay Classroom Costs; Aid Parents, Students With College Tuition" stressed the importance of saving receipts and maintaining expense records to take full advantage of deductions on educational expenses and credits available on federal income tax returns for 2007.
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