Nearly everyone experiences some form of financial hardship in their lives. Whether it is the loss of a job, a family emergency or an unexpected medical expense no one is exempt from the vagaries of life. Many times people become overwhelmed by their outstanding debts and day to day expenses, and simply can not keep up with their bills. It happens to more people than anyone likes to think about, and too often those with outstanding student loans can find themselves in a difficult predicament. How to keep their education loans from going into default during tough financial times?
There is an option for students facing financial hardships that will help them avoid late payments, costly penalties and loan default. Student Loan Deferment offers students with outstanding education loan debt the chance to successfully manage their loan obligations, avoid default and save their credit rating.
Student loan deferment is an agreement borrowers make with their lender to postpone repayment of the the principle on their outstanding loans for a predetermined amount of time. Borrowers receiving a deferment on the principle of their loans will still be responsible for any and all interest on that loan. Student loan borrowers can also work with lenders to capitalize the interest on their deferred loans, meaning the accrued interest on the outstanding student loan will be added to the existing principle. Payments against this new loan total can then be deferred, but this new larger principle will be accruing interest throughout the deferment period. This does increase the cost of a student's loan. However, it allows the student borrower to avoid default.
Students facing financial hardships can apply to their student loan lenders for a deferment. If you have become unemployed, are facing unexpected medical bills or are experiencing other economic hardships you should contact your bank or lender for details on possible loan deferment opportunities. Qualification for a student loan deferment will depend on your lender, and your unique financial situation. Keep in mind, loan deferment is a service that helps borrowers avoid loan default and/or bankruptcy and is not available for all borrowers.
Students with outstanding federal loans can also take advantage of loan deferment programs over and above the standard deferments and grace periods built into federal student loans. Again, qualification for these programs will depend on an individual's financial status, and no two cases are exactly the same. Consult the loan officer handling your student loans for additional information and details on any loan deferment programs that may open to you.
Students can apply for a loan deferment by contacting their lender directly. You will need to fill out an application, and will need to produce evidentiary proof your financial hardship. The application will then be reviewed by your lender and you will be notified as to whether or not you have been granted deferment. Not all student borrowers are approved for a loan deferment program, so it is wise to be prepared for rejection. Having said that, it is in the interest of you lender to work with you to avoid having your outstanding loans go into default.
Students applying for a loan deferment must continue to make payments on their outstanding loans until they have been approved and granted a loan deferment. Failure to meet payment obligations can result in a rejected application, and possible loan default.
Students holding outstanding loan debt face a large amount of financial stress. Finding gainful employment fresh out of college can be difficult, but student loans must be paid. If you find yourself facing difficult financial times, contact your lender for information regarding student loan deferment. It just may be the answer to the financial hardships you are suffering.