Federal Stafford Loan Forbearance
Forbearance is a way to temporarily postpone or reduce payments for a set period of time. This typically takes place because the borrower is experiencing financial difficulty, but can occur for any of the following reasons:
- Unemployment
- Partial Disability
- Other documented hardship
The borrower can receive loan forbearance if he/she is ineligible for a deferment. Unlike deferment, it doesn't matter if these loans are subsidized or unsubsidized because interest still accrues, and the borrower is responsible for its repayment. The borrower's loan holder can grant forbearance in intervals of up to 12 months at a time and for up to 3 years. In order to enact federal Stafford loan forbearance, it must be applied for through the loan servicer, and payments must still be made until forbearance has been granted.
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Interest Rates and Federal Stafford Loan Forbearance
In addition, federal loan forbearance does NOT lock interest rates. Even though loans are deferred, they can still have variable rates unless a loan is being deferred that was also consolidated (which has a fixed interest rate). Stafford loans borrowed prior to July 1, 2006 have variable interest rates, while Stafford loans borrowed after July 1, 2006 have fixed interest rates. If Stafford loans have been consolidated then the interest rate will remain fixed. Forbearance has no effect on the interest rate of a loan.
