Forbearance: What It Is And How It Can Help Student Loan Borrowers
Forbearance: What It Is and How it Can Help Student Loan Borrowers
What is Student Loan Forbearance?
Forbearance is a period of time when a student loan borrower can temporarily stop making their monthly student loan payments. During this period, the borrower does not have to pay interest on their student loans, and the loan servicer will not report the forbearance period to the credit rating agencies. Forbearance can be a great way for borrowers to manage their student loan payments if they are experiencing a financial hardship.
Who is Eligible for Forbearance?
Anyone with a student loan is eligible for forbearance. However, it is important to note that the type of student loan and the loan servicer may affect the type of forbearance that is available. For example, federal student loans are eligible for several types of forbearance, while private student loans may only be eligible for one type of forbearance.
What Types of Forbearance Are Available?
The two main types of forbearance are general and specific. General forbearance is available to any student loan borrower and allows them to temporarily stop making payments. Specific forbearance is tailored to a borrower's specific financial situation and may include reduced payments or an extended repayment period. It is important to note that some loan servicers may only offer one type of forbearance.
How Do I Apply for Forbearance?
The process for applying for forbearance varies by loan servicer. Generally, borrowers will need to contact their loan servicer and provide documentation of their financial hardship. Once the loan servicer has reviewed the documentation, they will determine if the borrower is eligible for forbearance and the type of forbearance that is available.
What Are the Pros and Cons of Forbearance?
Forbearance can be beneficial for borrowers who are struggling to make their student loan payments. It allows them to temporarily stop making payments and can help them avoid defaulting on their student loans. However, it is important to note that interest will continue to accrue during the forbearance period and that the loan servicer can report the forbearance period to the credit rating agencies.
Conclusion
Forbearance can be a great way for borrowers to manage their student loan payments if they are experiencing a financial hardship. It is important to note that the type of student loan and the loan servicer may affect the type of forbearance that is available, and that borrowers should contact their loan servicer to determine if they are eligible. While forbearance can be beneficial for borrowers, it is important to note that interest will continue to accrue during the forbearance period and that the loan servicer can report the forbearance period to the credit rating agencies.
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