Forbearance

If you have problems that affect your ability to meet your scheduled loan repayments, your lender might grant forbearance. During forbearance, payments are postponed (or in some cases just reduced) due to financial hardship. Interest accrues during this period and is added to the amount you already owe. Lenders are not required to grant forbearance but will usually consider it for hardship situations. Forbearance is normally granted in six-month blocks.

As noted earlier, medical residents who have used their two-year residency or economic hardship deferments can request that their loans be placed in forbearance for the duration of their training. Interest, of course, accrues during the forbearance period, thereby increasing the total amount owed and the monthly installments once repayment begins.

To request any type of forbearance, contact your loan holder. If you make the initial contact by telephone, be sure to follow-up in writing. Do not assume forbearance has been approved until you receive written confirmation from the lender.

Forbearance During Delinquency

If your loans become delinquent due to non-payment, you will have to “bring them current” before any deferment can be allowed. In many cases, your lender or servicer will grant a forbearance for the time period between the payment due date and the date your loans can enter a deferment status. Any time forbearance is granted, remember that interest accrues on the loans, making them more expensive. Forbearance is not granted automatically, and must be specifically requested.

Making Payments During Forbearance

Making a loan payment during a period of grace, deferment or forbearance can greatly lower the total amount you pay over the life of your loan. For loans that do not charge interest during grace or deferment, any payments you make during this period will reduce your principal balance. When interest begins to accrue, it will be based on a smaller balance, thus reducing the total interest you have to pay.
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