Forbearance

Here’s another term you should become familiar with if you’re having trouble paying off your student loans. Like deferment, forbearance is a mechanism designed to help if you need to either temporarily lower or postpone your student loan payments.

Forbearance is really for those folks who want to pay their loans but can’t and who were unable to get a deferment on their loans. The application process isn’t as onerous as the one for deferments, and the bureaucratic headaches that always seem to accompany deferments and loan discharges aren’t as prevalent with forbearances. Again, however, it is completely up to the lending institution to determine whether you are awarded forbearance.

If you are approved, be prepared to continue paying interest on your loan. If you can’t, the lender will simply add it to the ongoing loan bill and it will cost you even more money.

Forbearance is the loan holder’s way of saying “We feel your pain.” As long as you make a good faith effort to stay in contact with your lending institution and make your financial situation known to them, getting a forbearance shouldn’t be a major problem. Note that the forbearance is temporary, usually awarded in 12-month stretches for no longer than 3 years.

Start by contacting your lender and asking for the right paperwork. Fill it out, send it back, and follow up. Write down the name of your contact and file it away. Ask for that person whenever you feel like you’re getting the runaround from the lender.