It's always important to understand all of the details and options for your educational student loans, whether you have a Perkins Loan, Stafford Loan, or Consolidation Loan. Remember that it's extremely important to contact your lender immediately if you think you might have trouble making a payment; you may have other options such as forbearance or deferment. These terms are often confusing so here are some explanations.
Deferment
Deferment is a temporary suspension of loan payments for at least half-time enrollment in school, unemployment or economic hardship, or active military or reservist service during a war or qualifying military operation. For Perkins and subsidized Stafford Loans, interest does not accrue during a period of deferment; for unsubsidized Stafford Loans, you are responsible for paying the interest.
If you have exhausted the deferment options for your Perkins or Stafford Loans, applying for a Consolidation Loan may qualify you for renewed deferment options.
Forbearance
If you're not eligible for a deferment, you may be eligible for forbearance, which is a temporary reduction or postponement of your loan payments because of financial difficulties. Forbearance can be granted for periods up to 3 years--in intervals up to 12 months at a time. During forbearance, interest continues to accrue.
Cancellation
A loan can be cancelled if the borrower becomes totally or permanently disabled or dies. A Perkins Loan or Stafford Loan can also qualify for partial or complete cancellation or "forgiveness" if you meet certain conditions.
Perkins Loan conditions include:
- Teaching. Some examples include teaching in low-income areas, in special education, or teaching designated subjects in teacher shortage areas
- Service. Some examples include employment in a public/non-profit child/family services agency that provides services to high-risk, low-income families; employment as a nurse/medical technician, law enforcement/corrections officer, Head Start program staff member; volunteer work for Vista/Peace Corps; or being a member of the U.S. Armed Forces serving in hostile/imminent danger areas.
To be eligible for Stafford Loan cancellation/forgiveness, you must:
- Perform volunteer work
- Be in the military
- Practice medicine or teach in certain types of communities
Different terms and conditions apply so contact your lender for specific details on your loans and your cancellation/forgiveness options.
Contact Information
To apply for deferment, forbearance, or cancellation or to obtain more information, contact:
- Federal Perkins Loan - Contact your school
- Direct Loans (Stafford) - Contact the Direct Loan Servicing Center at 1.800.848.0979 or go to: www.dl.ed.gov
- FFEL Loans (Stafford) - Contact your lender or their servicing agency (whoever sends you billing information)
You have options as long as your loan is not in default. It's important, therefore, to apply for deferment or forbearance before your loan goes into default. Remember that you must continue to make payments until you have been notified that your deferment or forbearance has been granted.
Source
Student Aid on the Web
About the Author:
Judi Sandall is a graduate of the State University of New York, with a BA in English Literature. She is a technical writer and editor who worked in student financial aid for over 20 years.
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