Deferring or postponing Stafford Loan payments is possible under specific conditions, as long as the loan is not in default

Payment Plans

The Standard Repayment Plan
The Extended Repayment Plan
The Graduated Repayment Plan
The Income-Contingent Repayment Plan.

With the Standard plan, the student will have monthly payments of at least $50 and can repay the loan for a period of up to 10 years, depending on how much has been borrowed. The Extended plan (which is not available with FFELP Stafford Loans) is a good option if you have a bigger loan that you think will be difficult to pay over 10 years. The Extended plan allows you to pay back the money over a period of up to 30 years. The monthly payments are lower, but the added interest will mean you’ll end up paying more in the end. The Graduated plan is an option where payments begin as low as 50 percent that of the Standard plan, plus you can repay the loan over an extended period of up to 30 years. The monthly payments for the Graduated plan increase about every two years, and by the end of the repayment cycle you will be making monthly payments of up to 150 percent that of the Standard loan. With the Income-Contingent plan, just as the name implies, payments are based on your income, as well as your family situation. This very flexible plan takes into account your ability to pay, and if by the end of 25 years there is still a balance due, the unpaid amount will be forgiven. However, the federal government could hold you responsible for paying the taxes on the amount that wasn’t repaid.

Deferring a Stafford Loan

You must contact the agency carrying your loan to apply for deferment. Be prepared to present documentation to support your request. Your eligibility for deferment depends on the date your loan was payday loans Wyoming IL first disbursed, the current status of your loan, and the following criteria. Deferment is granted for:

Graduate or fellowship study
Half- or full-time enrollment in a post- secondary institution
Involvement in rehabilitation programs for the physically challenged

Economic difficulties
Inability to find full-time employment

TIP…It is not necessary to have an account at a particular bank to secure a Stafford Loan, but start by checking with your own bank or the bank your parents use.

Any student who is willing to make loan payments but is unable to do so, and who is not eligible for a deferment, may apply for forbearance. Forbearance is a specified amount of time during which you are not required to make any payments on the principal balance or interest of your loan. You must contact the organization that carries your loan and inquire about procedures to apply for forbearance. Most companies require some type of written statement about your present financial situation.

If you qualify for any one of these requirements and would like to apply for cancellation, contact the organization carrying your loan. Some of these conditions are dependent on the amount of funds available to cover such programs, so check with your loan company for availability.

The organization carrying your loan should inform you of the date repayment is to begin. However, if this deadline has passed and the company has not contacted you, it is your responsibility to either notify the organization or begin repayment on time. Stafford payments are typically made over a five- to ten-year period, depending on the size of the loan.

TIP…Did you know you may take a tax deduction for educational expenses, such as tuition, if schooling is necessary for you to keep your current job or if it is required in order to retain your current rate of pay?

Disbursement

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