How to Defer Your Student Loan Repayment?
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How to Defer Your Student Loan Repayment?

Tuesday May 19, 2009

How to Defer Your Student Loan Repayment?
Student loans are the best way to pay for your education, but it is a debt that must be paid and the fact is that you never know what life brings. When someone gets fired or ill or faces some unexpected major expense, repaying your loan only adds to your worries. Sometimes, even the most responsible borrowers can’t handle their payments. If you ever get in such a situation think about deferment.
To defer your student loan actually means to take a break from paying it. During a certain period of time you are allowed not to make payments but that doesn’t mean that you don’t have to pay at all. Actually when the period of deferment is over you continue from the exact same point you were at before the deferment. However while your principal remains locked during this period, the interest accrues. If you have a subsidized loan such as Perkins or subsidized Stafford loan, the government will pay the interest so it is all the same to you but it is a different case with unsubsidized loans, where the interest accrues and it is added to you principal amount so you will end up paying interest for interest.
Deferment doesn't mean you don't have to pay!

However not everyone qualifies for deferment. There is a deferment threshold for your monthly income and you should not exceed it. It is all explained in the application form. If you have already started repaying your student loan you can ask for a deferment application form at any time. On the other hand if you are not, you can ask for the deferment after graduating before you start paying the loan. You can also ask to prolong the deferment after the set period of time is over.

You can apply for a deferment if you are:
  • in school, at least halftime (you must supply the information from your school whether you are a half time student or more, as well as if your school or college is eligible. Lenders can also ask some additional information…)
  • unemployed (you need to document your state and you must be in active search for employment)
  • suffering economic hardship (working less than 30 hours per week, receiving social welfare)
  • unable to work or attend school for at least 60 days to recover from the illness or injury or if you have developed the disability after obtaining student loans
  • pregnant and with complications or have a spouse or dependent that requires at least 90 days of nursing or similar care that prevents you from working full time)
  • in military
There are other ways too

If by any chance you don’t fall into any of these categories, consider some alternatives like loan consolidation which restructures your payments, forbearance which is another way of postponing your payment but the interests accrue whether your loan is subsidized or not. Federal loans offer an option of loan cancellation for full-time teachers in a low-income school.

Never ignore your student loan, no matter how difficult situation you are in. Every missed payment will leave a mark on your payment history for future lenders to see. Making small payments is better than avoiding them! You can also restructure your loan, decrease your monthly payments, which does extend the payment period, but at least it keeps you a responsible borrower.





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