Dear Dr. Don,
My son is a college graduate with student loans and is currently unemployed. He had his loans on forbearance after graduating because he was not yet working. Then, he got a job and started repaying the loans until he lost his job. Can he put his loan "on hold" again while receiving unemployment?
-- Linda Laidoff
Dear Linda,
Look to the loan agreement to spell out your son's options concerning modifying the repayments of his student loans. The three main options are forbearance, deferment and changing the repayment plan.
The information on the Federal Student Aid Web page "Postponing Repayment" is another place to start looking into his options. The following is an excerpt from that page:
Postponing Repayment
If you have trouble making your education loan payments, contact immediately the organization that services your loan. You might qualify for a deferment, forbearance or other form of payment relief. It's important to take action before you are charged late fees. For Federal Perkins Loans, contact your loan servicer or the school that made you the loan. For Direct and FFEL Stafford Loans, contact your loan servicer. If you do not know who your servicer is, you can look it up in the U.S. Department of Education's National Student Loan Data System (NSLDS).
There are several types of deferments, including an economic hardship deferment. Again from the "Postponing Repayment" page:
A Direct, FFEL or Federal Perkins Loan borrower may qualify for an economic hardship deferment for a maximum of three years if the borrower is experiencing economic hardship according to federal regulations. The Loan Deferment Summary Chart here shows Stafford and Perkins Loan deferments for loans disbursed on or after July 1, 1993. For information on deferments for loans received before that date, Direct Stafford Loan, FFEL and PLUS Loan borrowers should contact their loan servicer.
Forbearance comes into play if the borrower isn't eligible for a deferment. With forbearance, the interest expense on the loan accrues, increasing the loan balance.
Forbearance can be granted in intervals of up to 12 months at a time for up to three years. The borrower is expected to keep making the loan payments until notified that the forbearance application was approved by the loan servicer.
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