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The Cost of Forbearing Your Student Loan


Things To Know

You are not entitled to a forbearance

Your lender has the discretion and authority to offer forbearance to assist you in the repayment of your debt when appropriate.


Interest will continue to accrue during the forbearance period

Although accrued interest is calculated on a simple daily basis, interest can accumulate over time and result in a much higher loan balance.

Example:
Original loan balance = $20,000.00
Length of forbearance = 12 months
Interest rate = 6.8%
Total interest accrued = $1,341.37
New loan balance = $21,341.37

Over the course of a 10-year repayment term, you could pay $500 more in interest, (assuming a 6.8% interest rate).

To find out how much interest you will accrue on your loan, use TG's Forbearance Cost Calculator.


Higher payment may result

Based on the above example:
Payment before 12-month forbearance = $230.16
New payment after 12-month forbearance = $245.81

A deferment may be a better, less expensive option

Unlike a discretionary forbearance, a deferment is an entitlement. Therefore, it's important to check with your lender and inquire about the different types of deferments that are available to see if you qualify for any of them.

You may be eligible for a deferment if you are in school, unemployed, experiencing economic hardship, or in the military.

Generally, deferments are a better option than forbearance. While interest accrues on all loans during periods of forbearance, the federal government pays the accruing interest on subsidized Stafford loans during periods of deferment. Keep in mind that interest continues to accrue on unsubsidized Stafford loans, PLUS loans, and those portions of Consolidation loans comprised of unsubsidized Stafford and PLUS loans during periods of forbearance and deferment.

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