How often should I apply for a student loan?

How Often Can I Apply for Student Loan Forbearance?

• Answer:

  A person who is having trouble making his student loan payments may be able to postpone payment of the loan. Contacting the organization that services the loan is the most important action that this person can take. He may find himself eligible for a deferment of the loan payment or eligible for forbearance of the loan until he is in a more stable financial situation. Forbearance is a temporary solution that has limitations and disadvantages. Forbearance Defined When a student loan is in forbearance, the lender allows the borrower to postpone making payments on the loan for specific period of time. Although payments are not due during forbearance, interest on the loan continues to accrue. Each lender creates its own criteria to determine if a loan holder is eligible for forbearance. Usually a borrower must submit a formal forbearance request to the lending institution. The lender then considers the request. Forbearance Limitations Loan holders may grant forbearance for periods of up to 12 months at a time. Many financial institutions grant forbearance for shorter periods of time. When a forbearance term ends, the borrower may immediately apply again for forbearance. The lender again determines if the borrower meets eligibility requirements and then either denies forbearance or grants a new forbearance period. A borrower may be in forbearance for a total of 36 months over the life of the loan. Deferment Options Those who are re-enrolling in school, unemployed or facing another economic difficulty may apply for deferment of their student loan payments. The main difference between a deferment and a forbearance is that interest does not accrue on subsidized loans that are in deferment; interest does accrue on loans in forbearance. A person who applies for deferment or forbearance must continue to make payments until the lender has approved the application. Repayment Options Those who begin repaying student loans are asked to choose a repayment plan. Borrowers are not locked into following this plan. A borrower may adjust his repayment plan once a year if he has a Federal Family Education Loan Program loan, and any time he chooses with a Federal Direct Student Loan Program loan, as long as his loan has been open longer than the new repayment term. Some repayment plans include standard repayment, graduated repayment, income-based repayment and extended repayment.