What is Forbearance Student Loan: What is a student loan forbearance? However, you are unlikely to make any headway towards loan forgiveness or repayment.
You can temporarily make a lesser payment or avoid making any payments via forbearance. Consider income-driven repayment as an alternative.
What is Forbearance Student Loan?
In times of financial need, you can temporarily stop or reduce your student loan payments (usually for a period of 12 months or fewer) by applying for student loan forbearance.
Forbearance is less preferable than deferment, which allows you to avoid paying interest that accrues on some loans during the deferment term.
When the fortitude period is finished, you are always liable for any interest that has accumulated.
Pros and Cons of Student Loan Forbearance
Forbearance of subsidized loan payments offers upsides and downsides, much like other financial instruments.
Forbearance is a better option, both financially and in terms of how it will affect your credit if the alternative is, for instance, wage garnishment or losing your tax refund.
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Pros
1. Better than garnishment or default
2. Lower interest than payday or personal loan
3. Frees you to pay critical expenses
4. Has no impact on your credit score
Cons
1. Not a long-term solution
2. Capitalization of accrued interest is expensive
3. Repeated renewal could result in loan default
4. Late/missing payments hurt your credit score
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