Published February 2013. Financial aid and student loan rules change often, so some details may be out of date. Ask us about your situation.
When students graduate from college, the bills start coming in the mail almost immediately, regardless of whether or not a he or she is adequately employed or has enough money saved to make regular payments. To assist with this transition, There are generally a few options available for new graduates that will allow them to postpone payments for a period after graduation while they work to get themselves back on their feet.
One option is deferring your student loans. This path is usually available to students who are either still in school, are seeking out a graduate degree or are in a residency program, like Americorps, that in some way qualifies as a form of higher education. Members of the armed forces qualify for a special kind of deferment option as well depending on their lender or loan-backer. Basically, interest doesn’t accrue on the loan and payments aren’t required for a period of time approved by the lender.
A forbearance, however, is offered to borrowers who are looking to postpone monthly payments, although interest continues to accrue during the period. This means that borrowers will simply be responsible for taking care of the interest at a later date if they are granted a forbearance on their loan.
Although these programs can be a break for borrowers who are struggling with paying for college, they are only temporary solutions to long-term issues. Because of this, students should do their best to save up during these periods so that they will be better prepared to handle loan payments once this “grace period” ends.
There are different kinds of forbearance and deferment options available to borrowers depending on whether or not they took out their loan through a private or a government-backed loan provider.