What is the difference between a loan deferment and a loan forbearance?

The difference between a loan deferment and a loan forbearance in New Mexico is that loan deferment is a temporary postponement of loan payments, and loan forbearance is a temporary reduction of payments but accrual of interest still occurs. Loan deferment allows for student loan payments to be paused without incurring extra fees or interest for a certain period of time. Deferment is typically available for those experiencing financial hardship, those on active duty military service or in the National Guard, and those enrolled in school at least half-time. Loan forbearance, on the other hand, is a temporary reduction of payments. Generally, forbearance is available for those experiencing financial hardship, or those with loans serviced by the government who qualify and apply for the forbearance. Forbearance is generally available in two forms: a reduction in the monthly payment amount and/or an extension of the length of time for repayment. While payments are reduced during forbearance, interest continues to accrue on the loan. It is important to note that while both loan deferment and loan forbearance can be helpful in temporarily reducing or postponing loan payments, neither option permanently eliminates the debt or interest owed. Interest continues to accrue while deferment or forbearance is in effect, and the borrower is responsible for repaying the loan in full plus any interest that has accrued.

Related FAQs

Are there any financial aid programs specifically for veteran students?
Are private student loans eligible for the same repayment advantages as federal student loans?
Are there any grants or scholarships that can help with student loan repayment?
Are there any restrictions on how long I can have a student loan?
Are there any private student loan lenders that offer deferred repayment options?
Are there any grants or scholarships available to help with student loan repayment?
Are there any government programs to reduce the interest rate on student loans?
What are the differences between subsidized and unsubsidized student loans?
What types of loans are available?
How do I find out if I qualify for student loan debt consolidation?

What is the difference between a loan deferment and a loan forbearance?

Related FAQs

Related Blog Posts