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What Is The Difference Between a Deferment and a Forbearance?

29 Nov

With the rising costs of higher education, many people turn to student loans to finance their degree(s). Generally there is a 6 month grace period after graduation before repayment begins. But there are two other options of repayment postponement:

Forbearance and Deferment. What exactly are the differences?

Deferment options vary depending on what type of loan you have and your specific circumstances. You may qualify for a deferment if, for example, you are enrolled in school, serving on active duty in the military, unemployed, or experiencing economic hardship. During periods of deferment, the federal government will make interest payments on any subsidized loan. Interest on unsubsidized loans will accrue during periods of deferment and forbearance.

Forbearance options also vary depending on what type of loan you have and your specific circumstances. They offer a temporary suspension of your student loan payments if you don’t qualify for a student loan deferment, your deferment options have been exhausted, or you are experiencing financial difficulties. You are responsible for all interest that accrues regardless of the type of loan you have.

The best source of information concerning each option is the lender. Your options can vary greatly with the type of loan(s) you have. Don’t be afraid to contact your servicer(s) to ask any and all questions.