What is Loan Deferment?
Loan deferment is the postponement of student loan repayment. Your lender allows you to stop making monthly payments for a specific period of time. While your loans are in deferment, Interest does accrue on them. In some cases the borrower is responsible for paying the accrued interest, while in other cases the federal government pays the accrued interest.
What is Forbearance?
Forbearance is deferment. If you need temporary relief from
college student loan repayment, you may qualify for a forbearance from your lenders. If you do, the lender will postpone (or sometimes temporarily lower) your loan payments until you can get your finances in order.
How do I Qualify?
You may qualify for forbearance if you are unable to make loan payments because of medical problems or serious financial troubles, such as unemployment.
Your lender is required by law to allow you to forbear your loans if your monthly loan payments are more than 20% of your monthly income. They also have to let you forbear your payments if you've suffered from a natural disaster such as an earthquake or other.
It is important to note that If you are already in default you will not qualify for forbearance.
Student Loan Repayment
Consolidaton
What is Student Loan Repayment Consolidation?
Consolidating
your student loans for repayment allows you to combine all of
your eligible federal student loans into a single, convenient monthly
payment at a fixed rate. Depending on your total outstanding
student loan balances you might be eligible to extend your
student loan repayment period while lowering your monthly
payments by up to 45%. If you have already graduated from
college, or will within 6 months, student loan repayment
consolidation may save you thousands locking you in to a fixed,
low interest rate student consolidation loan, sometimes as low
as 5%.
Please remember
that longer repayment terms will lower your monthly payments
but can increase the total repayment amount.
Visit our
Student Loan Consolidation section
featuring a Chase Federal Consolidation Loan.
Loan Default
What is Loan Default?
If you don't make a payment for a specified period of time,
typically 180 days, you will be in what is called "default." Students who default on their loans
may negatively impact their credit history.
What Happens if I Default on My Loans?
Common things that happen when someone Defaults:
-Credit bureaus are usually notified, thus your credit rating
can suffer.
-The U.S. Treasury may withhold your payments toward repayment of your loan.
-You may have to pay additional collection costs.
-You may be subject to Administrative Wage Garnishment, whereby the Department
may require your employer to forward 10% to 15% of your disposable pay toward
repayment of your loan.
-Federal employees face the possibility of having 15% of their disposable pay offset
by the Department toward repayment of their loan through the Federal Employee
Salary Offset Program.
-The Department of Education or your alternate lender may take
legal action to force you to repay the loan.
-You will no longer be eligible for federal aid.
-If you are eligible for a tax refund, the government may seize the refund amount and
apply it to your loan debt.
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