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Administrative Forbearance Options for Student Loans

A forbearance is a temporary suspension of the obligation to repay a student loan. Forbearance options for private student loans vary by lender, and may be less flexible than the deferment and forbearance options available on federal education loans. Some lenders use the word "deferment" as a synonym for "forbearance" in connection with private student loans.

Some lenders offer forbearance while the student is in school and during a medical residency or internship. Some do not, and require that repayment begin while the student is in school. Some require interest-only or good faith payments while the student is in school. Unlike federal education loans, some private student loan programs do not require that the student be enrolled on at least a half-time basis to qualify for an in-school suspension of the repayment obligation. However, private student loans may have caps on the total duration of an in-school forbearance, so students who take more than four years to graduate may have to start repaying their loans before graduation.

Most lenders who offer an in-school forbearance also offer a forbearance during a 6-month grace period after graduation.

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Some lenders offer a short-term forbearance to borrowers who encounter financial difficulty or unemployment. Generally, such forbearances are up to 2 months at a time and may be no more than 12 months in total duration. In some cases, the lender may charge the borrower a monthly fee for each loan in forbearance.

Other common types of forbearances include military deferment for up to 3 years and forbearances for borrowers who are affected by natural disasters.

Interest continues to accrue during a forbearance. If the borrower does not pay the interest as it accrues, the interest will be added to the loan balance, increasing the amount of debt.

Some lenders offer a partial forbearance as an option. Payments on the principal balance of a loan are suspended during a partial forbearance, but the borrower agrees to pay at least the new interest that accrues. This keeps the loan balance from growing, so that the borrower does not dig himself or herself into a deeper financial hole.

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