Deferment or Forbearance — Delaying Student Loan Payments
Student loans can be crippling on a household budget. The average monthly student loan payment across 44 million student loan borrowers is $351. That’s a lot of money each month, but say you were able to fit it into the budget somehow — maybe you cut out entertainment funds or found a way to spend less on groceries. However you did it, you make those payments and you survive. Now what if something comes up? Say your kid gets sick and needs medication; or you lose your job and have trouble finding a new one. If your only option is to use the budgeted student loan payment, do you skip your payment this month? Or are there better options?
The answer is simple: You can delay your federal student loan payments by applying for deferment or forbearance. What’s the difference? And which is better for your situation?
- Deferments push payment due dates back an entire year. Depending on the type, your loans may not accrue interest while in deferment. If you are eligible, deferments are best used when long-term problems may affect your ability to keep up with your monthly payments. (For more, see our article Is a Deferment Better than a Forbearance?)
- Forbearance can last up to a year and you are entitled to three years total. (Private loans may provide forbearance, but they are not required to.) Unlike deferments, all loan types will accrue interest while in forbearance. Because interest still accrues, forbearance can be costly, so they are best used as a short-term solution.
No matter which choice you make, delaying loan payments is better than choosing to default or go delinquent on your student loans. Student loans, unlike many other debts, will stick with you even through bankruptcy. So make sure you always have a proactive approach to your own student loans and delay payments when you need to.
And if you need help, there are plenty of people out there with the right knowledge to help you.
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