Delaying Payments

Grace, Deferment and Forbearance:

Grace:

Once you graduate from school or drop below half time status, you enter what is called the Grace period. Grace allows you the ability to delay your payments while maintaining your loan's interest benefits during the time your in school (no interest on your subsidized loans and .60% rate reduction on variable rate loans). The length of your grace period is determined by your loan type. Stafford loans are allowed a six month grace period, where as Perkins allow for a nine month grace period.

Deferment:

You may be more familiarized with deferment from your time in school. After your loans are issued and you carry the full-time status of a student, your loans are deferred. This means that either no payments are required, certain loans carry an interest discount of .6%, and on subsidized loans, the interest is paid for you. What many borrowers don't realize is that deferment options exist even after you leave school. From Armed Forces personnel to new parents, or even individuals suffering from economic hardship, there are many programs where your lenders will work with you.

It is important to remember that although deferment offers many interest benefits, you must apply and qualify for a specific deferment program. The length of deferment will vary based on the program you qualify for.

View available programs and application documents.

Forbearance:

If you are having trouble making payments, forbearance may be an option for you. This program allows for you to delay your payments when you don't qualify for grace or a deferment program. During forbearance your interest, even on subsidized loans, is building. If not paid, will result in a higher Principal amount owed when you begin making payments again.

This program is limited to a total of 36 months for the life of your loan. The length of time forbearance is allowed is up to your lender; they may choose to renew every six or twelve months. Once you have used all 36 months, you will no longer qualify for forbearance (unless you have a new loan, as in the case of a consolidation, where the clock is reset on your 36 months).

What is the difference between a deferment and forbearance?:

Both a deferment and forbearance will temporarily suspend monthly payments. To qualify for a deferment, specific criteria is required of the borrower. Qualifying for forbearance is different because the borrower is willing but unable to make monthly payments due to a temporary personal or financial hardship. Qualifying for forbearance is subject to your lenders approval, where as deferment requires you to meet the needs of the specified deferment program.

It is important to know that the difference between forbearance and deferment is at no time during forbearance will interest benefits be paid by the government, regardless of the loan type. Therefore, the Borrower is responsible for all accrued interest during the forbearance period.

To discuss your options in further detail, contact a Student Aid Advisor at:

(800) 964-0642 option 2