It is very important to keep in touch with your lender(s) or servicer(s) during repayment; especially if you are having trouble making payments. While it may not be easy to admit you are in trouble, by working with your lender, you may be able to find a solution that reduces your payments and preserves your credit. Its best to work with your lender before you miss a payment.

Depending on your situation, you may be eligible for loan deferment or forbearance.

Deferment

A deferment is a period of time during which a lender temporarily postpones regular payments. Deferments are granted for specific situations, as defined by the law. If you qualify for a deferment, by law, your lender must grant you one. You must request a deferment from your lender and provide all required documentation.

If you are granted a deferment, the government will pay the interest on any subsidized loans you have, for the length of the deferment. Interest on unsubsidized loans and PLUS loans will continue to accrue. If you do not pay any interest during a period of deferment on unsubsidized or PLUS loans, it will be capitalized, and your monthly payment may increase after the deferment period.

You May Qualify for a Deferment if:

  • You are enrolled in full or half-time study at an eligible school
  • Have an economic hardship
  • Are unemployed
  • Are serving, or recently served on active duty

Contact your lender to see if you qualify and what documentation is necessary

Forbearance

Forbearance is another option that may be able to help you during periods of financial difficulty. During forbearance, a lender temporarily reduces or postpones regular loan payments. This option is usually reserved for those who do not qualify for a deferment. Forbearance is granted at the loan holder’s discretion.

The federal government does not pay interest on any loans, including subsidized loans during the forbearance period. You are responsible for any interest that accrues. If you do not pay any interest during a period of forbearance, it will be capitalized, and your monthly payment may increase after the forbearance period.