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Default Prevention: Understanding Deferment, Forbearance and Loan Consolidation

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As I mentioned previously, lenders tend to be more flexible than not when it comes to arranging alternative means of loan repayment. Understanding lending terms and how each option works will benefit you in your search for loan payment relief if you are unable to commit to standard loan repayment.

Additional Loan Repayment Options

In addition to repayment programs, a borrower may choose to apply for loan deferment, loan forbearance or loan consolidation. Below is a brief description and a list of common eligibility requirements.

Loan Consolidation

Loan consolidation is a wise initial step that enables the borrower to merge all loans under one lending company making the loan payments one monthly bill, it may allow interest adjustment, and can extend the loan over a longer period of time, lessening the amount of each monthly payment.

Loan Consolidation Calculator (American Education Services)

Loan Deferment

Loan deferment is when the lender allows the borrower the ability to temporarily freeze for a period of time the payment obligation of the loan based upon pre-determined events or circumstances:

  • Unemployment or working less than 30 hours per week
  • Enrolled in school half time or full time
  • Involvement in education activity such as an internship or residency
  • Economic hardship
  • Service in either the military or National Guard

Loan Forbearance

Loan forbearance, an alternative option to loan deferment, works in similar ways. Under forbearance, the lender may allow the borrower to suspend payments based on certain events or life circumstances as in deferment; however, the borrower is still responsible for paying interest. Forbearance should always be a secondary option to deferment. Qualifying circumstances may include:

  • Temporary Hardship
  • National / Community Service
  • Internship/Residency
  • Student Loan Repayment Program
  • Economic Hardship

As with any alternative repayment plan, it is important to discuss with your lender which option is best for your circumstance and which option is most likely available to you. Remember that any delay in the repayment of your loan will lessen the load for you currently, but will end up costing you more money in the future. Do your research and make educated decisions when it comes to loan repayment alternatives.


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