Deferment, Forbearance, and Consolidation

Changing times demand changing repayment options, and federal student loans of all kinds, including federal student loan consolidation, offer flexible repayment options, including deferment and forbearance. Here is a quick summary of common loan payment management solutions:

• Deferment is an entitlement that postpones payments. If you qualify, you must be granted a deferment.
• Forbearance is a discretionary plan that postpones payments. Forbearance is optionally granted by the lender based on many factors, including your payment history and loan status.
• Consolidation is a loan type. Consolidation does not postpone payments, but does reduce them, making them more affordable.

When it comes to payments and interest, here are some more key differences:

• In deferment, no interest accrues on subsidized loans. Unsubsidized loans accrue interest. At the end of the deferment, any accumulated interest is added to your loan.
• In forbearance, interest accrues on all loans regardless of type. At the end of the forbearance, accumulated interest is added to your loan. Forbearance may also require a small interest-only monthly payment.
• In consolidation, interest is paid as part of each monthly payment.

Additionally:

• In deferment and forbearance, your interest rates remain variable and can substantially increase or decrease based on market conditions. It is in your best interest to consolidate before filing for either.
• In consolidation, your interest rates are locked in at the time of consolidation and cannot decrease or increase.

Finally, when it comes to time periods:

• Deferments usually are granted for a period of 36 months and are non-renewable unless you consolidate.
• Forbearances are granted for periods based on the lender's discretion, usually 24 or 36 months and are non-renewable unless you consolidate.
• Consolidation loans renew your deferment and forbearance eligibility by closing out your old loans and opening a new consolidation loan.

Deferment, forbearance, and consolidation are not automatic processes. You must apply for each program.

Click here to consolidate your student loans to renew your deferment or forbearance privileges!

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