How to Apply for Loan Forbearance

• By Tracy
• Also try: How to Reduce Student Loan Debt | How to Defer Student Loans | How to Apply for Loan Forgiveness

Introduction

• Forbearance literally means to "refrain." Thus when you apply for a forbearance on your student loans, you are asking to stop paying, at least for a little while. Unlike deferment, however, interest will continue to accrue on your loans even if they've been subsidized by the government. Because forbearance is only recommended in truly difficult financial circumstances, you'll want to exercise your option to refrain from paying with care. That said, a forbearance is highly preferable to not paying your loan at all and going into default, which could land you in court.

Is Forbearance Your Only Option?

If you're only seeing Top Ramen in your near future, you might want to apply for a forbearance. (Creative Commons photo by Iain and Sarah)

• There is more than one way to postpone payments on your loans, and if possible, you should choose deferment, or simply try to lower your payments to an amount you can afford.

1. Keep in mind the differences between deferment and forbearance: both allow you to postpone repaying your loan, but each treats interest differently. If you have subsidized federal loans, interest will not accrue while your loans are deferred. Under the rules of forbearance, interest will accrue regardless of the type of your loan. Thus, if possible, it's better to request a deferment if you can.
2. See our guide, How to Defer Student Loans, to see if you qualify.
3. If you aren't sure what types of federal loans you have, you can go to the National Student Loan Data System and look up your loan information using your social security number and other personal information. Before accessing this info, however, you'll need to sign up for a PIN number if you don't have one already.
4. Also contact any private lenders to see what options they can offer you.
5. Switching your repayment plan or consolidating your loan may lower your monthly payments such that you do not need a forbearance. See Mahalo's guides to How to Choose a Loan Repayment Plan and How to Consolidate Student Loans. For further tips on getting rid of student loan debt, see How to Reduce Student Loan Debt.

Do You Qualify?

1. You will generally qualify for forbearance if:
   • • Your monthly loan payments equal or exceed 20% of your gross income
     • You require forbearance because of other financial hardship
     • You are volunteering with Americorps
     • You are teaching in an eligible school
     • You have been accepted into an internship or residency program
     • You are in poor health or are suffering other personal problems that impact your ability to pay
2. Note that the government may allow forbearance following a national emergency such as September 11 or Hurricane Katrina.
3. You may also want to use forbearance to postpone defaulting on your loans if you are already delinquent.

Apply

Applying for forbearance will leave you with more cash now, but you may owe a bunch later. (Creative Commons photo by Tim Boyd)

• You'll need to specifically request forbearance.

1. Download the appropriate forms at the Federal Student Aid website.
2. Note that you will likely need to provide supporting documentation of your income, if that's why you believe you qualify for forbearance, or you may need an official to certify that you are indeed working in a qualifying profession.
3. For private loans, contact your lender to see if forbearance is an option and how to apply.
4. If you make an agreement about forbearance orally with your lender, they must send you written confirmation.

Consider Simply Reducing Payments

• Note that while in forbearance, you can also pay less than your usual amount as opposed to skipping payments altogether. Doing so may make future payments more manageable.

Continue to Pay Interest

1. If at all possible, keep making interest payments during your forbearance period.
2. Borrowers who take a lengthy break from paying their loans often end up in a much worse position than the one they started in when it's time to start repaying their debt.
3. To avoid mounting interest and significantly higher payments upon repayment, keep paying the interest due each month.

Resources for How to Apply for Loan Forbearance

• FinAid.org: Glossary: Forbearance
• Student Loan Borrower Assistance: Forbearance
• Federal Student Aid: Forbearance Forms
• Simple Tuition: Repaying Your Student Loans
• FinAid.org: Defaulting on Student Loans
• Student Loan Borrower Assistance: Postponing Repayment

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