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How to Pause Your Student Loan Payments | Student Loan Forbearance's & Deferment's | Jason Spencer Dallas
How to Pause Your Student Loan Payments | Student Loan Forbearance's & Deferment's | Jason Spencer DallasJason Spencer Student Loan CBS Local News BBB Better Business Bureau Dallas BBB DFW
[caption id="attachment_561" align="alignnone" width="300"] Jason-Spencer-Dallas-Texas-Student-Loan-Relief[/caption]According to Jason Spencer Dallas, Students are burdened with student loan debt like never before. Americans owe over $1.4 trillion in student loan debt and the average graduate walks away with $37,172 in debt. Keeping up with your payments can be difficult, especially if you’re facing hardships like unemployment or a medical emergency.
If you’re in a tough spot, you have options you can use so you don’t default on your loans. If you have federal student loans, you can use deferment or forbearance to get through a rough patch. While using either option is not ideal, they can be a tool to help you get back on your feet according to Jason Spencer Dallas.
Student loan defermentStudent loan deferment is a federal repayment option that allows you to pause your student loan payments for up to three years. Depending on the type of loan you have, you may not be responsible for interest charges that accrue on your loan.
ProsIf you defer your student loans, you can stop making payments without entering default or damage your credit. That can free up money in your budget to pay for other demands, such as medical bills or rent. Having that breathing room can allow you to focus on getting your finances back on track.
If you have subsidized student loans, the government will pay interest that accrues while your debt is in deferment.
ConsIf your loans are unsubsidized, the government won’t cover the interest that accrues on your debt. That means your loan balance can grow while you’re in deferment and you can end up paying back thousands more in interest once deferment is over.
How to apply for student loan defermentTo be eligible for student loan deferment, you must meet one of the following criteria:
If you don’t qualify for student loan deferment for whatever reason, you might still be able to pause monthly payments through student loan forbearance.
Student loan forbearanceLike student loan deferment, you can postpone student loan payments or lower monthly payments via forbearance. If you qualify for forbearance, you can stop making payments for up to 12 months.
There are two types of forbearance: mandatory and discretionary.
With mandatory forbearance, the government requires loan servicers to grant you a forbearance if you meet one of the following criteria:
ProsIf you’re facing a short-term emergency, such as a job loss, forbearance can give you much-needed relief while you get back on track. By getting your payments reduced or eliminated for a short time, you can get your finances in order without falling behind on your loans.
ConsForbearance can be a useful option if you’re facing money problems, but there are some consequences to consider. Interest continues to accrue on your loans when you’re in forbearance and you’re responsible for paying that back, regardless of your loan type. That can add to the cost of your loans and make it harder to become debt-free.
However, forbearance is still a smarter option than not making payments and risking student loan default.
How to apply for forbearanceIf you’re applying for a discretionary forbearance, you must complete the General Forbearance Request Form and submit it to your lender.
For mandatory forbearance applications, you need to complete the form that matches your situation, such as the Student Loan Debt Burden Forbearance Form, Medical/Dental Residency Form, or AmeriCorps Service Form. Send the form with documentation to back up your claim to your loan servicer.
Before applying for deferment or forbearanceWhen you apply for deferment or forbearance, remember that you must keep making student loan payments until your loan servicer notifies you that they’ve accepted your request. Otherwise, you could become delinquent on your loans.
Even though deferment or forbearance can extend your repayment term and cause interest charges to build up, either option is preferable to entering into default. These two programs can provide much-needed relief if you’re facing a financial emergency.
For more information about federal loan repayment options, learn how to lower your payments with income-driven repayment plans.
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