A lot has been written about forbearance options being one of the many benefits of federal student loans but what is generally overlooked is the fact that some private lenders also offer borrowers this option.
Forbearance allows you to postpone your monthly payments temporarily for a fixed period of time. This can come as a huge relief to if you encounter some type of financial hardship that makes it impossible for you to continue making your monthly payments.
With federal student loans, forbearance is generally granted for up to 12 months. During the forbearance period, any interest that accrues on your subsidized student loans and Federal Perkins Loans are paid off by the government. However you are responsible for paying off all interest that accrues on any of your unsubsidized loans.
Federal vs Private Loan Forbearance
The difference between federal and private loans is that the forbearance benefits are not standardized. Moreover, not all private lenders offer this option. If you find you just cannot make your monthly payments, it is worth checking with your lender about the forbearance or any other postponement options available. Some lenders also offer partial forbearance options where you make interest-only payments to ease your financial distress.
It is important to keep in mind that forbearance is not an option that you should choose lightly. Although it helps postpone your payments, the interest keeps accruing during the forbearance period, so you end up paying much more by way of interest over the life of your loan.
If you’re considering student loan refinance or consolidation, check out our free guide!