POSTPONING AND CONSOLIDATING LOAN REPAYMENT
Under certain circumstances, you can receive periods of deferment or forbearance that allow you to postpone loan repayment. These periods don't count toward the length of time you have to repay your loan. You can't get a deferment or forbearance for a loan in DEFAULT.
Deferment
A deferment is a period of time during which no payments are required and interest does not accrue (accumulate), unless you have an unsubsidized Stafford Loan. In that case, you must pay the interest.
How do I qualify for a deferment?
The most typical loan deferment conditions are enrollment in school at least Half-Time, inability to find full-time employment (for up to three years), and economic hardship (for up to three years). Other deferment conditions are loan specific.
Can my parents defer repayment of their PLUS Loan?
Yes, as long as the loan isn't in DEFAULT. Generally, the same deferment provisions that apply to the Stafford Loans apply to PLUS Loans. Because PLUS Loans are unsubsidized, however, your parents will be charged interest during periods of deferment. If they don't pay the interest as it accrues, it will be capitalized (added onto the principal amount).
Forbearance
If your temporarily can't meet your repayment schedule, but you don't meet the requirements for a deferment, your lender might grant you a forbearance. During forbearance, your loan payments are postponed or reduced. Interest continues to accrue (accumulate), however, and you are responsible for paying it, no matter what kind of loan you have.
Generally, you can receive forbearance for periods of up to 12 months at a time for a maximum of three years. You'll have to provide documentation to the holder of your loan to show why you should be granted forbearance.
Your parents might also receive forbearance on their PLUS loan.
Applying for Deferment or Forbearance
Receiving deferment or forbearance is not automatic. You or your parents must apply for it.
- Federal Perkins Loan - contact the school that made you the loan or the school's servicing agent.
- Direct Loans (including Direct PLUS Loans) - contact the Direct Loan Servicing Center at: www.dl.ed.gov or call them at 1-800-848-0979.
- FFEL Loans (including FFEL PLUS Loans) - contact the lender or agency holding the loan.
You must continue making payments on your loan until you're notified that your deferemnt or forbearance has been granted. If you don't, and your request isn't approved, you will become delinquent and cound end up in DEFAULT.
Consolidation
What is loan consolidation?
You can consolidate (combine) multiple federal student loans with various repayment schedules into one loan: either a Federal Family Education Loan (FFEL) Consolidation Loan or a Direct Consolidation Loan. Then, you can make just one monthly repayment.
With a consolidation loan, your payments might be significantly lower and you can take a longer time to repay (up to 30 years). Also you might pay a lower interest rate than you would on one or more of your existing loans.
Your parents can also get a Direct or FFEL PLUS Consolidaton Loan if they have a PLUS Loan for you.
If you're in DEFUALT on a federal student loan, you still might be able to consolidate, provided the defaulted loan is not subject to a judgment or wage garnishment.
All the loans discussed are eligible for consolidaiton, and others can be included. For a list of your loans eligible for consolidaiton, contact your lender if you're applying for a FFEL Consolidation Loan.
