If you encounter problems and are unable to make a necessary repayment of your student loan, you should always contact your lender as soon as possible. You might be eligible of student loan deferment or be granted a forbearance. Typical reasons behind a student loan deferment is unemployment or that you have returned to school half time or more. Many student loans have special regulations regarding which circumstances that can be considered a valid reason for student loan deferment.
There is a big difference between student loan deferment and student loan forbearance. A student loan deferment is a period of time during which you are not required to make any payments and no interest will accumulate during the student loan deferment period, unless you have an unsubsidized Stafford student loan. With an unsubsidized Stafford Loan you are required to pay interest even during a deferment period. If you are not eligible for a deferment you might still be able to get forbearance. Forbearance is typically granted for a person who is temporarily unable to meet the repayment schedule. During the forbearance period, your student loan payments are postponed or reduced depending on you financial situation. The interest will however accumulate during the forbearance period. Forbearance can usually not be granted for more than one year at a time and for no more than tree years totally. Forbearance can be granted for students with student loans and parents with PLUS student loans.
Deferment is typically granted those who are unable to make the payments of their student loans due to unemployment or other similar economic hardship. Enrolment in school at least half time is also a common reason behind deferments. If you have received a deferment due to unemployment or financial hardship, the deferment period is limited to three years for federal student loans. Other types of student loans can have other rules and limitations. Just like students with federal student loans, parents with federal PLUS loans can be granted a deferment of their payments. If the PLUS loan is an unsubsidized student loan the parents will be charged interest during the deferment period, and if they are unable to pay the interest it will be added to the principal loan.
To apply for a deferment of forbearance you should contact the lender. You will never receive deferment of forbearance automatically just because you go back to school or become registered as unemployed; you always have to apply for it. If you have a Federal Perkins student loan you should contact the school responsible for the loan. Some schools instead have a servicing agent that you should contact. With a Direct student loan, such as a Direct PLUS student loan for parents, you should contact the Direct Loan Servicing Center. With a FFEL student loan, including FFEL PLUS student loans for parents, you should contact the lender or agency that is holding the loan. With all types of student loans, you will be required to provide your lender with documentation that shows why you may be eligible for deferment or forbearance. Always contact your lender as soon as you suspect that you might be unable to fulfil your duties on time. This is very important, since you can not receive deferment or forbearance when your loan is already in default. If you ignore your payments without contacting your lender, your loan can become default which can lead to severe consequences and will affect your credit rating for a long time. For the FFEL and Direct Loan programs, your loan will become default if you do not make a payment for 270 days if you repay monthly, or 330 days if your repayments are due less often. All other types of student loans have their own conditions and the period before the loan becomes default can be shorter as well as longer.