What Can I Do to Postpone My Loan Payments?

Dear Mary:

People who are unemployed and actively seeking employment can be eligible for an unemployment deferment. You would apply for this deferment either with your loan servicer (the company that manages your loan), your lender, or your guarantor. However, it is the servicer who will either grant or deny the application.

As long as you meet the qualifications for the deferment and apply, you can be granted up to 1 year (per application) of suspension of payments. No payments are due during this period, and for the subsidized portions of your loan, the interest is paid for by the government. Remember that the unsubsidized portions of the loan do still accrue interest, and this interest can be capitalized (added to the principal balance) on a quarterly basis.

If you have applied for unemployment deferment in the past, and have used up that time available to you, another option would be to apply for forbearance. This is also a temporary suspension of payments, but it works differently because the interest on all parts of the loan (subsidized or unsubsidized) still accrues and will be capitalized at the end. It is a good idea to try to pay the interest while your loan is in forbearance, so your loan does not become larger by the end of the period.

If you are not seeking full-time employment, and you do not see yourself increasing your income any time in the near future, you may want to consider a lower payment option instead. There are several to choose from and your loan holder can discuss your eligibility. You may also be able to go to your lender’s website to see the effects of each option on your monthly payment.

Regards,