After graduating from undergraduate school and working less than 30 hours a week; I looked into postponing my student loan payments to be able to pay my necessary bills.
Due to me having a Government Subsidized Federal student loan, I was able to put my student loan into deferment for a few years until I was financially back on track. The way it worked was that the government paid back the principal and the interest while my student loan was in deferment, and it all counted towards a “payment” being made.
Here are possible situations that may qualify you for deferment:
- Back in school at least half-time.
- Unemployed, or working less than 30 hours a week and looking for full-time work.
- Temporarily having difficulty making ends meet.
- Actively serving in the U.S. military during a war, military operation, or national emergency.
- Actively serving in the Peace Corps or AmeriCorps.
- In a graduate fellowship program or rehabilitation training
(*source: www.mygreatlakes.org)
Later on down the road, I decided to take a graduate course. I was in a much better financial state than before, but I still needed financial relief, so I applied to put my student loan into forbearance.
The rule about forbearance is that it is subject to the lender’s approval and it has a time limit, which may or may not be eligible for renewal. Additionally, you are accruing interest even though you are not making any payments. This meant that I was ultimately paying back more towards my loan because of the continuous interest being accrued for the time that it was in forbearance.
From my experience, I would think the deferment was the best option for my situation.
If I were to offer any advice to graduates looking to pay off student loans, I would challenge them to:
- Know what kind of student loan they have (Federal Subsidized, Federal Unsubsidized, Private loan)
- Know their interest rates
- Know the time frame that they would need relief
- See if they qualify for deferment first
- Always make forbearance the last option
- Check with your student loan provider to find out if they offer free education about your student loan options (mine is mygreatlakes.org).
If for some reason you have graduated and is not eligible for a postponement or deferment, I would recommend:
- Finding employment opportunities that reimburse for education (teachers, public service, hospitals, etc)
- Income Based Repayment Plan
- Income Based-Contingent Repayment Plan
- Pay as You Earn Plan
- Revised Pay as You Earn Plan.