Repayment Remedies


There are several alternatives if you find yourself unable to make your loan payments and are at risk of default. The first thing you should do — before you miss payments or pay late and incur late fees — is contact the organization that services your Perkins, Direct, or PLUS Loan to ask for a deferment, forbearance, or other remedy. In the case of a Perkins Loan, contact the college or university you attended.

DEFERMENT

A deferment is a temporary suspension of your obligation to repay that may be granted because you are unemployed, face certain economic hardships, or are returning to school at least half-time. If you qualify and submit the required documentation, you can defer principal payments for up to a total of three years during the terms of your loans if you're unemployed or face economic hardship. There is no maximum time limit if you're enrolled in school. If you're on active or post-active military duty, you also qualify for a deferment.

If you have a Subsidized Direct or a Perkins Loan, no interest will accrue during the deferment. But if you have an Unsubsidized Direct or a PLUS Loan, interest does accrue. You can either pay it during the deferment or it will be capitalized and added to your principal, increasing the amount you will have to repay.

FORBEARANCE

If you don't meet the standards for deferment but still need payment relief, you may appeal to your lender or servicer for forbearance. Forbearance, when it's granted, permits you to reduce or postpone payments or extend the time for making payments, usually at the discretion of the lender. Forbearance requests typically are granted for a period of up to 12 months at a time for up to three years.

Interest accrues on all types of loans during a forbearance, and you are responsible for paying it.

For more information on deferment and forbearance, go to http://studentaid.ed.gov/repay-loans/deferment-forbearance.



SWITCHING REPAYMENT OPTIONS

As another possible remedy, you may want to change the payment option you have selected to make your monthly payments more affordable. If you have Direct Loans, you can change plans any time as long as the maximum repayment period under your new plan is longer than the period during which you have already made payments.

You can use this calculator to compare what your payments would be under different repayment plans.
 
Interest continues to accrue during forbearance, and during deferment if you have unsubsidized loans. This interest will be capitalized and added to your principal, increasing the amount you eventually have to repay.