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Payment Difficulty

If you have having trouble making payments, contact your loan servicer immediately. They have several options that may help. You may qualify for a deferment or forbearance. Several different repayment plans exist that may lower your monthly payment.

A deferment is an approved temporary suspension of loan payments based on certain events or criteria. A deferment enables borrowers, under certain conditions, to postpone loan repayment for specified periods of time. You must apply for a deferment through your loan servicer. If you have a subsidized Stafford Loan or Perkins Loan you will not accrue interest during a deferment. If you have an unsubsidized Stafford Loan, you are responsible for the interest during the deferment. You can make interest payments or choose to have the interest capitalized. You must continue to make payments on the loan until you are notified that the deferment has been approved.

Forbearance is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. You can receive forbearance if you are not eligible for a deferment. Unlike deferment, however, interest accrues, and you are responsible for repaying it. A forbearance is granted in increments of one year. You must apply for forbearance with your loan servicer. You must continue to make loan payments until you have been notified that the forbearance has been granted.

Repayment Plans
Student loan repayment schedules fall into one of three categories:

  • Level – the monthly installment amount remains the same throughout repayment; small changes in the monthly installment amount may occur for loans with a variable interest rate if the annual interest rate increases.
  • Graduated – the monthly installment amount varies during repayment. Typically a graduated repayment schedule allows borrowers to elect a period of smaller payments during the beginning of the repayment period. Some graduated payment programs base the monthly installment amount on interest only for a limited period of time; others may allow a payment that is smaller than a level payment but still pays some principal and interest. Some programs base the monthly installment on a percentage of the borrower’s income for a limited period of time. Contact your loan servicer to determine what type is best for you.
  • Income Sensitive - the monthly payment amount will be established based on your monthly gross income and student loan debt. To apply for an Income-Sensitive Repayment Schedule for the next 12 months, contact your loan servicer. You may be required to submit documentation of your monthly income from all sources.
Last Reviewed: November 24, 2004