Don't Let Financial Challenges Derail Your Education.

When facing financial hardships or significant life changes, borrowers of federal student loans may find relief through deferment or forbearance options. These programs provide temporary solutions to pause or reduce loan payments, helping borrowers avoid default and maintain financial stability during challenging times.

Understanding Deferment and Forbearance:

1. Deferment: Deferment allows borrowers to temporarily postpone making payments on their federal student loans. During deferment, borrowers may not be responsible for paying the accrued interest on certain types of loans, such as subsidized loans, which the government covers. This means that the interest does not accrue and capitalize on these loans during the deferment period.
2. Forbearance: Forbearance also allows borrowers to temporarily halt or reduce their federal student loan payments. Unlike deferment, borrowers are responsible for paying the accrued interest on all types of loans, including subsidized loans, unsubsidized loans, and PLUS loans, during the forbearance period. This interest may accrue and capitalize, potentially increasing the total loan balance.

Comparing Deferment and Forbearance:

• Eligibility: Both deferment and forbearance options require borrowers to meet specific eligibility criteria, which may include financial hardship, enrollment in school, unemployment, or military service.
• Interest Accrual: The key difference between deferment and forbearance lies in the treatment of accrued interest. During deferment, borrowers may be exempt from paying accrued interest on subsidized loans, while in forbearance, borrowers are responsible for all accrued interest, regardless of loan type.
• Impact on Loan Balance: Since interest accrues differently during deferment and forbearance, the impact on the loan balance varies. With deferment, the potential for interest capitalization is lower, as accrued interest on subsidized loans is typically covered. However, in forbearance, borrowers may see their loan balance increase due to accrued and capitalized interest.

At Aved Consulting Firm, we provide personalized guidance to borrowers exploring deferment and forbearance options. Our experts can help you understand the eligibility requirements, compare the implications of each option on your loan balance, and navigate the application process with confidence.

Don't let financial challenges derail your education or career goals. Contact us today to explore your options for managing your federal student loans effectively.