Federal Student Loan Forbearance

Unfortunately, a large number of recent college graduates will be unable to find employment following their commencement ceremony. In many cities across the country, unemployment rates are high, which contributes to a saturated job market. Because the majority of college students obtain federal loans which requirement repayment, locating employment that offers a decent salary is a main concern.

On average, the federal government allows a six month grace period before students must begin repaying loans. This grace period consist of the six months following graduation. Hence, if a student graduates in May, they would not be scheduled to begin repaying their student loan until the following November.

Because some recent graduates do have trouble finding employment after graduation, federal student loan lenders offer programs and services that are intended to ease the financial burden. One option available to graduates is forbearance.

What is a Student Loan Forbearance?

Federal student loan forbearances will temporary postpone repayment of principle balance and interest. Although payments are stopped, the loan balance will continue to incur interest. Students have the option of making interest-only payments during the forbearance period. If not, the incurred interest will be capitalized into the principle.

Requesting a Student Loan Forbearance

Applying for student loan forbearance is simple. The majority of federal student loan lenders offer websites which service a variety of options. In this case, students may download and print a forbearance application. The application can be either mailed to the lender or faxed. Students may also request forbearance by contacting an account representative for the lender.

How Long are Forbearance Periods?

Student loan forbearances are for a maximum of twelve months. At the conclusion of the forbearance period, students who require an extension may apply for another twelve month forbearance period.

When to Apply for a Forbearance?

If possible, apply for student loan forbearance at least 30 days before the loan is scheduled for repayment. Periodically, federal student loan lenders will mail students updated statements. These statements will likely include future repayment dates.

Other Option for Meeting the Expense of Federal Student Loans

âÂ?¢ Student Loan Deferment – Deferment is an option of delaying loan repayment. Before a student loan is deferred, students must meet a certain criteria. Furthermore, not all student loans are eligible for deferment. Reasons for student loan deferment may include continuing student education, unemployment, financial hardships, illness, military duty, etc.

âÂ?¢ Student Loan Cancellation – Also referred to as loan forgiveness, student loan cancellation involves having 100%, or a portion of the student loan debt forgiven. To qualify, students must meet loan forgiveness requirements. For example, teachers may qualify for loan forgiveness under certain circumstances. Typically, teachers must have received a degree in education, teach for five consecutive years following graduation, and teach in a low-income school district.