By SARAH CORNETT – EDITOR-IN-CHIEF
In today’s economy, the need for student loans to finance a college education seems to be almost inevitable. While most students receive other financial aid and scholarship money, it can be incredibly difficult to pay off student loans immediately after graduation.
Thankfully, there are several available options that can allow for federal student loans to be put off or even cancelled entirely. These options refer to the processes known as: Forbearance, Deferment, and Cancellation.
Student Loan Forbearance is the idea that if an individual can’t pay back loans when they’re due, payback can be delayed for up to twelve months.
By receiving Forbearance, the individual could then settle into a job to become financially stable enough to make loan payments.
However, Forbearance is accompanied by one unfortunate element. Although payments on the student loans are delayed, the interest on said loans is not. In some situations, Forbearance could place the student even further into debt.
According to Federal Student Aid, there are two main types of Forbearance: Discretionary and Mandatory. Discretionary Forbearance is decided by an individual’s lender and can be taken or rejected by the student.
Mandatory Forbearance, however, is when the student meets certain standards that then require the lender to push back the loans. These cases apply to members of the National Guard or other branches of the U.S. military.
To get an extension on student loan payments, Deferment is a better option than Forbearance. Student Loan Deferment allows for the student to delay loan repayment without accruing interest. For Deferment, the government pays the interest rather than leaving that to the student.
Since the government is paying the interest, there are strict parameters on what types of loans can be deferred. A student may only defer on a Federal Perkins Loan, Direct Subsidized Loan, or a Subsidized Federal Stafford Loan.
In contrast, a student can defer payments on PLUS loans or unsubsidized federal loans, but in these cases the government will not pay any of the interest.
A PLUS loan is given to an individual working toward a graduate or professional degree. An unsubsidized federal loans, gives students the ability to pay the interest during their time at school.
Individuals are eligible for Deferment if they are members of the Peace Corps, active military members, or are currently unemployed.
The final option to handle student loan payments is Cancellation, Forgiveness, and Discharge. In these cases, student loans can be completely wiped out, but they are very difficult to obtain.
It is only under extreme circumstances like school closure, death, bankruptcy, or false certification of student eligibility that a student may qualify for these options.
To summarize, Deferment is a student’s best option since it allows for a delayed repayment without accruing a stifling amount of interest.
Forbearance is a sturdy second option, despite the fact that it could mean additional debt. Although cancellation is the most ideal option, it is also the least likely.
For all of these cases, the individual student must contact his or her loan servicer to research and review the qualifications and requirements.