How Long Can a Student Loan Be In Forbearance?
You probably want to know how long a student loan can be in forbearance. This article is set to discuss the length of the student loan forbearance. Please keep reading to get the complete information.
There are two types of student loan forbearance policies. The first type is a mandatory forbearance which cannot be overruled by the borrower and it lasts until he or she can prove that they can afford their monthly payments. The second type is a discretionary forbearance which can last from a few months to several years.
How Long Can A Student Loan Be In Forbearance?
The length of a student loan forbearance is different for each case. The two types have some rules that the borrower must follow in order to be approved or remain enrolled on a discretionary forbearance plan. These policies are set by the Department of Education and they vary from one lender to another so it’s best if borrowers check with their lenders, review their loans’ promissory notes, or contact Federal Student Aid directly before applying for forbearances even though many larger financial institutions send notices when interest accrues during these plans. In most cases, if you’re unable to make your monthly payments because you lost your job after being employed there over 12 months then this type will allow an unemployment deferment which can last up to three years.
The length of the mandatory forbearance is different for each case as well. The two types can be very beneficial to borrowers since interest does not accrue on subsidized loans during these plans, but they’re best if used sparingly and only when it’s clear that you’ll be unable to make your payments in the near future because this type cannot be extended past twelve months without proof that another financial issue occurred or if a borrower has filed for bankruptcy protection.
Finally, there are some other factors which may determine how long a student loan can remain in forbearance such as whether or not you have any private education loans along with federal ones, who owns them (the US Department of Education vs lenders), etc. Contacting Federal Student Aid before applying for forbearance is recommended regardless of your financial situation since they can provide information on eligibility for this type or confirm that you’re currently enrolled in another plan.
Is Student Loan Forbearance Bad?
There are some benefits to student loan forbearance such as the fact that you won’t have to make any monthly payments while enrolled in this plan. However, interest does accrue on subsidized loans during these plans and its best if they’re used sparingly since there is a limit of twelve months without proof that another financial issue occurred or if a borrower has filed for bankruptcy protection.
If your lender provides discretionary forbearances then please contact them before applying because Federal Student Aid can provide information on eligibility for this type or confirm whether or not you’re currently covered by an existing one rather than automatically enrolling borrowers into mandatory ones which could last longer than needed. You should also keep in mind that most lenders will send notifications when interest begins to accrue during a discretionary forbearance.
In conclusion, student loan forbearance is not good in most cases, but it can be beneficial when used sparingly and only when you’re unable to make your monthly payments. You should contact Federal Student Aid before applying for forbearance because they provide information on eligibility or if you’re already enrolled into another plan. The length of mandatory plans are different for each case as well so this type is best used sparingly since there’s a limit on how long interest doesn’t accrue on subsidized loans during these plans without proof that another financial issue occurred or borrower filed for bankruptcy protection.