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Written by Carrie Johnson (former SDSU Extension Family Resource Management Specialist).
I work with quite a few student loan borrowers who have gotten a little behind on their payments. After discussing options with them for a while, we typically will request either a deferment or forbearance from their loan servicer until they can start making regular payments again.
Many people think that their credit will be negatively affected by having their student loans in deferment or forbearance status. Your credit score will not be affected at all. It will be noted on your credit report that your loan is in deferment or forbearance, but it DOES NOT affect your score. If you are late on a scheduled payment or you default on your loan (you fail to make a payment for 270 days) that will have a negative impact on your credit score.
A deferment is a period of time your payments (principal and interest) are postponed because of certain circumstances. The following conditions qualify you for a deferment:
- During a period of at least half-time enrollment in college or career school
- During a period of study in an approved graduate fellowship program or in an approved rehabilitation training program for the disabled
- During a period of unemployment or inability to find full-time employment (up to 3 years)
- During a period of economic hardship (includes Peace Corps service) (up to 3 years)
- During a period of active military service during a war, military operation, or national emergency
- During the 13 months following the conclusion of qualifying active duty military service, or until you return to enrollment on at least a half-time basis, whichever is earlier
A forbearance is if you can’t make your scheduled loan payments, but don’t qualify for a deferment. You can request to stop making payments or reduce the monthly amount for up to 12 months. There are two types of forbearances.
- Discretionary forbearance is when your lender decides whether to grant it or not based on financial hardship or illness.
- A mandatory forbearance requires your lender to grant it based on certain reasons.
For more information on deferment and forbearance processes you can visit the FSA website.
No, if you have already defaulted on your loan there are some options to get out of default including loan repayment, loan rehabilitation, and loan consolidation. Contact your lender immediately to start to process of repairing your credit.