Good intentions aside, you may find that you are temporarily unable to meet your student loan repayment obligations after you're no longer enrolled in school at least half-time. It's important to know that you can't pretend that you can just will those payments to go away, but you do have some important options.
If you have a Perkins loan or a private loan, then you will need to contact either your school for the Perkins loan or the lender for a private loan. However, if you have a Stafford loan, several standard deferment and forbearance options are available.
Deferments
If you cannot make your student loan payments, you should contact your lender immediately. The lender will help you determine whether you qualify for a deferment or a forbearance. If you receive a deferment, the government will pay the interest on any subsidized Stafford loans. If you have an unsubsidized Stafford loan, then you will continue to pay the interest.
An Economic hardship defers your loan for up to three years. To demonstrate economic hardship, documentation will normally be required, such as a letter from a state agency saying you qualify for state assistance. Work in organizations like the Peace Corps also fall into this category of deferments.
Lack of Full-Time Employment may also lead to a deferment for up to three years. Again, some type of documentation may be required.
Active Military Duty would allow you to defer any student loans disbursed on or after July 1, 2001, while you are on active duty during a war, other military operation, or national emergency. The deferment is good for up to three years.
Forbearance
If you do not qualify for a deferment, but cannot make your monthly payments, you should contact your lender about forbearance. During a forbearance period, you will be responsible for all interest that accrues, regardless of whether your loans are subsidized or unsubsidized. Under certain circumstances, the lender must grant you forbearance. These circumstances include:
If you are in part of your medical or dental school residency.
If your payments would be more than 20% of your monthly income.
If the Department of Defense makes payments on your student loans.
If you do not fall within one of these mandated forbearance categories, your lender will often work with you anyway. A lender may grant forbearance for up to three years, normally for 12 months at a time. Documentation may be required.
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