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The deferment option in case of Federal Student Loan is one of benefits available to students, but differs depending upon the category of federal loan opted by students. Deferment generally refers to deferring one’s liability for a future period. Let us have a look at the details of deferment, given the choice of loan category.
Federal Stafford and Perkins Loan
The facility of deferring loan liability is available to students who have either opted for Stafford Students Loan or Perkins Loan. According to the deferment option these students are allowed to postpone their liability provided they fall under the following categories.
- o The student has been attending school atleast half the time
- o Those students who are unemployed.
- o Candidates pursuing approved graduate program
- o Students undergoing rehabilitation program for disabled.
- o Facing financial hardship.
The deferment is permitted upto a period of 3 years where the student is either unemployed or is facing any kind of financial hardship. It is important to note the fact that deferment of repayment liability does not offer to lock the interest rates. Stafford loans offered before July 2006 had variable interest rates and fixed interest rates were prescribed for loan granted later to July 2006. Hence the benefit from interest rates depends on your loan program.
Federal Student PLUS Loans
These loans are granted to the parents of undergraduate students. The deferment option depends upon the parent’s financial soundness or in other words parent’s borrowing ability. Student on behalf of whom the loan was taken is not considered here nor his financial status. The eligibility conditions for opting deferment in case of PLUS loans are similar to that of Stafford and Perkins loans.
Where students do not qualify for a deferment option, one need not get disheartened, Forbearance option is still open. Similar to that of deferment, you are allowed to opt for repayment at a later date or time period or reduce the repayment amount for the time being. Sometimes we are left with no other option but to choose deferment or forbearance in order to secure our credit status. Maintaining a decent credit score is absolutely essential for all future dealings. What is important is that you should inform your loan service provider about your circumstance and know the options available. You will never know what is in store unless you try and find out explaining your case in particular.
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