There are a bunch of options that you can employ if you are a student who is struggling with student loans. One option that keeps coming up is student loan deferment. Along with forbearance and Income-Driven Repayment (IDR) plans, the idea of student loan deferment and using a student loan deferment calculator is becoming increasingly popular. Here’s what you need to know about student loan deferment:
What is Student Loan Deferment?
A student loan deferment enables you to reduce the loan amount you have to pay or stop making payments for about three years. During this time, the interest on subsidized loans does not accrue as the government handles it. However, this is not the case with unsubsidized loans.
Should you Defer your Loans?
Before you go ahead with student loan deferment, here are some things you ought to consider:
Are your loans Perkins loans or subsidized federal loans?
Deferment can do you a lot of good if you have a subsidized loan as the interest during deferment does not accrue. However, the interest will accrue on unsubsidized loans or private loans while in the period of deferment.
The possibility of making a reduced payment
If you are looking for a payment term that gives you time and allows you to make relatively small repayments, an Income-Based Repayment (IBR) plan may be more up your alley. However, you cannot afford to pay anything and are desperately seeking breathing room, going for a deferment is the answer.
Will you be able to resume your payments soon?
Deferment is a short-term solution, which means it will work well if you have a temporary financial setback. However, if you do not see yourself resuming your loan repayments, you are better off without a deferment.
What are the types of Federal Student loan deferment?
There are a variety of student loan deferment types for federal loans. Here are a few:
Unemployment deferment
Deferment is a short-term solution, which means it will work well if you have a temporary financial setback. However, if you do not see yourself resuming your loan repayments, you are better off without a deferment.
What are the types of Federal Student loan deferment?
There are a variety of student loan deferment types for federal loans. Here are a few:
Unemployment deferment
If you are unemployed or unable to find and hold a full-time job, you may apply for a deferment of up to three years. However, you must either receive unemployment benefits or show that you are looking for full-time work through an employment agency. Also, you have to reapply for the deferment once every six months.
Military deferment
If you are involved in military service that is in connection with a war or military operations, you are eligible for student loan deferment. You get a 13-month grace period after you are done with service.
How do you qualify for a Student Loan Deferment?
Before you think about using a student loan deferment calculator, you ought to know how you qualify for a student loan deferment.
Federal student loan deferment
To avail federal student loan deferments, you need to apply. You can automatically get an In-school deferment if you are enrolled in school half-time. Make sure you head to the U.S Department of Education and the student aid repayment forms. Then, click no deferment and fill in the application based on the type of deferment you want and qualify for.
Private student loan deferment
If you want a private student loan deferment, you will have to get in touch with your vender since the terms vary with each lender. Depending on the lender, you could avail a form of deferment if you happen to be enrolled in school, the army, or if you are employed.
Student Loan Forgiveness
Student loan forgiveness seems to be another option that students who are struggling with loans turn to. With thousands of students on the verge of serious debt every year, it is no wonder that student loan forgiveness programs are popular. There are a variety of student loan forgiveness programs at your disposal. However, the most commonly known and used student loan forgiveness program is the Public Service Loan Forgiveness Program (PSLF).
Public Service Loan Forgiveness Program
In order to apply for the Public Service Loan Forgiveness program, you should have made repayments for ten years or 120 monthly payments to clear your current debt. After you have made these payments, the outstanding loan amount that you have will be forgiven, regardless of how much loan debt you have.
You must be employed full time in one of the following fields to be eligible for the Public Service Loan Forgiveness program:
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- A non-profit organization. All 501(c)(3) organizations are included.
- Public schools as a teacher
- Serving in the military
- Working in the state, federal, or local agencies
- Working in the emergency management services
- Working in public safety or law enforcement, which includes the police, firefighters, and so on
- Public health services, which means you need to be a doctor, a nurse, or someone who keeps medical records
- Working as a teacher in daycare, kindergarten, and so on
- Working as a public service employee for the elderly, including healthcare workers, nursing home workers, and so on.
Given how the PSLF program is known to be one of the leading federal forgiveness programs due to its benefits, it is not surprising that it is the most commonly used forgiveness program. You can use a public service loan forgiveness calculator to find out how much of your student loans can be forgiven.
Additionally, borrowers who qualify can avail 100% forgiveness from the loan without having to worry about tax. If you are looking to give student loan forgiveness a shot, PSLF might be the student forgiveness program for you.