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Making Strides

For many, student loans are the norm while going to college. Created to help students settle the cost of educational fees for post-secondary education, it takes away the burden of paying all your debts at a go. Applying for a student loan usually entails having the following requirements;

  • A valid Social Security Number.
  • Being a citizen or a valid noncitizen.
  • Having a High school diploma, GED, or a certificate from a home schooling program.
  • Maintain a 2.0 GPA..
  • Be enrolled in a legible school.

 Although student loans are great for offsetting acquired debts incrementally, sometimes keeping up with payments can be difficult.  For many who are struggling with payment of their student loans, a forbearance is usually the next line of action.

What Is Forbearance?

Simply put, Lenders or financial institutions offer forbearance to students who cannot afford to continue with their student loans. Essentially, if you’re unable to carry on with the payments for a period of time, you can request forbearance. Even though this seems like the logical thing to do, this simple act can cause you to acquire even more debt as the time progresses. According to the Consumer Financial Protection Bureau, a company known as, Navient added an interest of $4 billion via forbearances between 2010 and 2015. Forbearance can last up to a year and can be used by a borrower over 3 times. Thus, you’re more likely to acquire more debt as time passes by.

Why Are Forbearances a Bad Idea?

Forbearances seem like such a grand idea, especially when you need a short-term break from paying your student loans. However, here are a few reasons why it could in fact be the worst option:

Increased Interest DebtThe biggest issue with pausing your student loans via a forbearance is that your interests begin to pile up. Basically, an interest is added to your outstanding interest during your forbearance period. Hence, when your forbearance period is concluded, the newly accrued interest is added to your previous debt. Thus, your debt increases even more.

Lack of Progress in Repaying Your Loan – Usually, payments made towards your student loan are first deducted from the interest before the principal balance. So, your interests are settled first before the original balance of your debt. However, with an interest being charged on your outstanding interest, you might spend so much time paying off your interest before the actual loan. Thus, you might find it difficult to finalize the payment of your loans.

What Are Alternatives?

It is quite common to find students requesting a forbearance period for a variety of reasons. With the advent of that happening, try out these options instead;


Although similar to forbearances, the government is responsible for paying the interest on subsidized loans.

Partial Forbearance

In a partial forbearance, the borrower pays reduced interest only payments as the interest accrues over time. This way, it prevents the loan from becoming too large.

Income Driven Repayment Plan

This option entails the borrower making monthly payments of the loan from on his/her discretionary income. Discretionary income here refers to the amount by which adjusted gross income exceeds 150% of the poverty line.

If you have student loan debt, you may be eligible for a loan modification.  Elias Dsouza can help you with the student loan modification process.  Contact Elias today for a free consultation.

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