Tuesday, March 24, 2015

Can I Stop Making My Student Loan Payments Now That I am Unemployed?

May 24, 2015

Dear Cathy:

I have been making my student loan payments on time since finishing up with college.  I had a good job but was recently fired so how do I stop these payments until I can gain employment again?  Unemployed, Ohio

Dear Unemployed:

All you need to do is talk to the lender or service provider for your student loans.  Make sure they have your correct mailing information including your address, phone number and an email address. 

It’s important to know the difference between a “deferment” and “forbearance.”  Students should conduct extensive research before they consolidate their student loans.  Once they have consolidated certain types of loans, they are no longer eligible for a “deferment” but they still might qualify for a “forbearance.”

A deferment means students may postpone making payments on their loans under certain specific conditions.  If they are having difficulty making their loan payments in a timely manner, they may qualify for a loan forbearance.

Their servicer may allow them to reduce their payment amount, extend repayment length, or temporarily stop making payments if they apply for a forbearance. However, a forbearance is granted at the discretion of their servicer, and students may be asked to provide reasons or documentation to prove their eligibility.  Students still will remain liable for the interest that accrues on the loan during the forbearance period.

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