Student Loan Debt Forbearance Options–How A Federal Forbearance Plan Can Help Unemployed Graduates

College graduates who have federal student loans may be able to find debt relief assistance if certain financial hardships have arisen in their life, which have led to a situation where a particular graduate is having difficulty meeting their monthly payments or simply cannot make the payments at all. This has been one of the problems that unemployed graduates have faced when they entered an unwelcoming job market but also had federal loan debt which they needed to begin repaying after a grace period was offered. Yet, students who may be able to qualify for a debt forbearance option on their student loans do need to consider a few factors before entering into this particular agreement or turning to alternative options.

According to the Direct Loans website, forbearance is “A period during which your monthly loan payments are temporarily suspended or reduced. You may qualify for a forbearance if you are willing but unable to make loan payments due to certain types of financial hardships.” This particular definition for student loan forbearance, which is related to federal student loans, has been outlined for individuals seeking some form of debt relief due to the fact that many students simply hear that they can go a set period of time without paying their loans and attempt to enter into a forbearance program.

This can be difficult for some as interest does continue to build during forbearance and if a student is unemployed or facing financial hardship for an extended amount of time, this will obviously be quite costly in the long run. For this reason, many advisors often counsels students to look at options outside of forbearance first due to the fact that attacking debt directly out of college, when student loan payments are due, should be a high priority for anyone carrying college loan debt. There are some students who have simply defaulted on these loans, and this can be problematic particularly for those with federal debts, but some students have, again, simply entered into a job market where there are little options or opportunities that will provide them the funds to repay this particular debt obligation and meet other necessary expenses as well.

There are some instances where students may be able to find more affordability in their monthly payments on student loan debts if they enter into a consolidation loan where their federal loans will be grouped into one lump sum, which can also lower monthly payments, but this may cause overall costs to increase as well. Yet, students who are in a Direct Loans repayment program may also qualify for an income-based repayment program which will allow them to meet monthly payments on their student loan debt at an affordable level since it will be based on a percentage of their income.

While many students are looking for financial aid at the present time for the summer and fall semesters of 2011, there are many students who may be nearing graduation and are unsure of how to handle their college loans. While there are different types of loans, like private and federal, and subsidized or unsubsidized, which will need to be factored into a student’s decision as to what repayment plan they choose, these repayment options and forbearance opportunities may be helpful in the short-term if a student has had trouble getting on their feet financially, but again, students need to explore all of their repayment opportunities. However, despite the fact that there are drawbacks to forbearance plans and even consolidation loans, students are often advised to avoid missing payments on their student loan debt first and foremost since it can create problems with their credit score, and this could lead to further financial setbacks later in life.