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How to Pause Your Student Loan Payments | Student Loan Forbearances & Deferments | Jason Spencer Dallas
How to Pause Your Student Loan Payments | Student Loan Forbearance’s & Deferment’s | Jason Spencer Dallas
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 deferments
Student 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.
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.
Deferments are not automatic
To request a deferment, you must complete an Unemployment Deferment Form, In-School Deferment Form, or Economic Hardship Form. You should send the appropriate form and documentation showing you meet the eligibility requirements to your loan servicer for their review.
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 forbearance’s like student loan deferments 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:
Under discretionary forbearance, your loan servicer decides whether or not you qualify. You may be eligible if have financial difficulties, medical expenses, or other acceptable cause.
If 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 forbearance
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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