Forbearance or Defer

[HaveNoClue]

I'm one month shy of my deferment being up. I'd like to postpone again.

 

I get really confused between forebearance and deferrment. Can someone explain to me why I would want to do one instead of the other.

[tolstoy]

A forbearance is just that they aren't going to collect on a debt when it is currently due. Meaning, you aren't in school, military, etc. etc. that they give as reasons in which you can get a deferral.

 

When you are in a deferrment period and they are government loans, the govt will pay the subsidized loan portion. In a forbearance situation, you aren't entitled to the government subsidies.

 

You have to qualify for a deferrment under certain conditions. A forbearance is the more expensive route because you really don't have to have a reason other than you are willing to pay but unable to do so currently and all of the interest will compound in a forbearance.

[baa]

Tolstoy pretty much summed it up. Forbearance is a good option when you cannot pay for a period of time. It does not count against your credit but the interest can mount up over time. Deferments are better, but you have to qualify for it, and there are only certain conditions that allow it. Examples would be enrolling back in school part time (over 6 hours a semester I believe) going into the Peace Corps or a couple other volunteer organizations, etc.

 

One option is to get a forebearance for your loans, but still send money to cover the interest. Direct Loans (Dept of Education) allowed me to do that.