Q:What is the difference between deferment and forbearance?
With a forbearance or deferment, you temporarily stop making payments on your student loan. The difference between these relief options is that you are not responsible for any interest that accrues on subsidized and Perkins loans during deferment. You are still responsible, however, for any interest that accrues during the forbearance period.
Because of this difference, it may be more difficult for you to receive approval for deferment compared to forbearance. If your student loans are not subsidized or you have Perkins loans, however, deferment and forbearance provide the same benefits.
Q:What’s the difference between student loan delinquency and default?
Student loan delinquency happens when you miss a payment. If your account is delinquent for more than 90 days, it will be reported to the three main credit bureaus and potentially lower your credit score.
Student loan default happens when you are delinquent for a long period of time (typically 270 days). Once you default on your loans there are serious consequences and the entire unpaid balance (plus interest) immediately becomes due. You’ll also lose eligibility for certain types of relief, such as deferment and forbearance, and your wages may be garnished. Your tax refund may also be withheld and applied to your unpaid balance.
Q:I defaulted on my student loans. What are my options?
Even if you have defaulted on your student loan, there are still repayment options available to help get things back on track. The last thing you want to do is fall deeper and deeper into the student loan default pit. That path could lead to garnished wages, annoying debt collectors, withheld tax returns, and damage to your credit. Depending on your situation, we may recommend student loan rehabilitation, forgiveness, or loan consolidation.
Q:What is student loan rehabilitation?
Student loan rehabilitation is a one-time relief option for getting your student loans out of default. It requires you to make nine (9) on-time payments over the span of 10 months. Once you complete the rehabilitation process, your loans will be back in good standing and the default will be removed from your credit report.
Q:Am I eligible for student loan forgiveness?
Unfortunately, this isn’t a question we can answer without knowing your unique student loan situation. Qualifying for student loan forgiveness is more difficult than it may sound, and there are different types of forgiveness for different people.
For instance, qualifying for Public Service Loan Forgiveness (PSLF) may be a better option for people in qualifying jobs. There are many hoops to jump through, however, in order to get PSLF approval. An income-based repayment plan forgiveness can be an option for eligible borrowers, but it does require a commitment of time (20-25 years) before any loan amount is forgiven.
If you’re interested in having your loans forgiven, we can look through every option to determine if any could offer you the student loan relief you need.
Q:Can you discharge student loans in bankruptcy?
It’s possible to have your student loan debt discharged in bankruptcy but it is very difficult. The process involves proving that paying the debt would cause “undue hardship” on you and your dependents. Successfully passing the tests to prove undue hardship is far from easy. If you do pass the tests, however, your student loans will be canceled.
Q:Can I apply for student loan relief on my own?
Absolutely. You can request deferment, forbearance, change your repayment plan, and even apply for student loan forgiveness without any outside assistance. The number-one complaint from borrowers like you, however, is frustration from dealing with student loan servicers. Our team knows who to call, what to ask for, and if what they’re saying is true for your situation.
Student Loan Repayment
Q:My 6-month grace period is nearly over. What do I do now?
If you’re ready to start making payments, that’s great! Just be sure that you’re in the right payment plan for you and you make your monthly payments on time.
If you’re not ready to make your payments, don’t worry. We know that leaving school doesn’t automatically ensure you have a full-time job with a good salary. Our team of student loan professionals will review all the options you might be eligible for, including forbearance and deferment, and walk you through every potential path. We’ll help you find a student loan solution that works for your current situation, even if you’re not ready to enter repayment yet.
Q:What are my student loan repayment options?
Most borrowers are placed in a standard repayment plan with fixed payments over a 10-year period, but there are other repayment options, including:
Graduated Repayment Plan
Extended Repayment Plan
Revised Pay As You Earn Repayment Plan (REPAYE)
Pay As You Earn Repayment Plan (PAYE)
Income-Based Repayment Plan (IBR)
Income-Contingent Repayment Plan (ICR)
Income-Sensitive Repayment Plan (ISR)
To determine which is best for your specific situation, we strongly recommend speaking with a MoneySolver student loan advisor.
Q:Are income-driven and income-based repayment plans the same?
An income-based repayment plan is actually one of four options under the income-driven repayment category. Your monthly payment under an income-driven repayment plan is a certain percentage of your discretionary income. The percentage will vary based on the plan you select. In certain cases, you may have no monthly payment at all.
Q:Should I refinance or consolidate my student loans?
Refinancing and student loan consolidation are great options for lowering interest rates and/or creating lower payments. If you switch to a private loan provider (e.g. bank or credit union), however, you will lose many benefits of the federal student loan program. Our student loan team will look at all possibilities with you, helping you weigh the pros and cons of each.
Other Student Loan Questions
Q:What’s the difference between federal and private student loans?
The federal government issues federal student loans through the Department of Education. Lenders like banks and credit unions offer private student loans. Federal student loans also offer more benefits – like not requiring a credit check and forgiveness options – than private student loans do. And you’ll need to ensure any private student loan lenders work with your school’s financial aid office.
At this time, our services are only available to those with federal student loans. You would need to contact your private student loan lender directly to see if they offer any relief options.
Q:How can I find out which type of federal student loan I have?
Before you can address your student loan debt, you’ll need to know which types of loans you borrowed. To determine your loan type, visit StudentAid.gov and log in with your FSA ID. You can access your loan information by selecting “View Details” from your account dashboard.
Q:Do you only assist people with undergraduate degrees?
We are passionate about helping anyone affected by student loan debt. If you took out a federal student loan for an undergraduate or graduate degree, regardless if you graduated or not, you’ll typically qualify for our services. We also assist parents and grandparents who took out Parent PLUS Loans to help their kids or grandchildren pay for college.