The cost of attending college is often so high that most students need to get student loans to pay for their college education. There are several reasons why newly graduated students may not be able to make payments on their student loans.
If this is the case, students can request help with a forbearance letter to the lender or through forms that are supplied by the lender. Forbearance for a student loan allows the student to postpone making loan payments or to reduce the amount he or she needs to pay for up to 12 months.
Lenders may be willing to give forbearance because it means the borrower may not default on his or her loan. Students who are planning to send a forbearance letter should remember not to stop making payments on their loan until forbearance is granted.
There are two types of forbearance including mandatory and discretionary. There are specific criteria that the student must meet in order to be eligible for mandatory forbearance.
The criteria are:
• The total amount the student pays for student loans each month is 20 percent or more of his or her total monthly income. Other conditions apply.
• The student is in a dental or medical internship or residency program and meets other requirements.
• The student has received a national service award and is in a national service position.
• The student is a teacher and qualified for teacher loan forgiveness
• The student qualifies for making partial payments under the U.S. Department of Defense Student Loan Repayment program.
• The student belongs to the active National Guard but is not eligible for military deferment on the loan.
Give supporting documentation
Just because the student is eligible according to the above conditions, does not mean he or she will automatically receive forbearance. They must apply to their loan service and may be asked to give supporting documentation.
Discretionary forbearance is up to the lender to grant or deny. Students can request discretionary forbearance if they are experiencing financial hardship or severe illness.
When the student writes a forbearance letter, he or she should remember to be polite and courteous, because the lender is under no obligation to grant the forbearance.
Interest will continue to be charged
Interest will continue to be charged on the loan during forbearance. The student can pay the interest or allow it to accrue and pay it at the end of the forbearance period.
If the interest is not paid, it will be added to the loan balance and the future monthly payments may be higher than the original payments.
The forbearance letter should contain any identifying information that will help the lender find the appropriate account. This includes a loan identification number or the date on which the loan was issued.
rules about granting forbearance
If the lender has rules about granting forbearance, the student should mention these rules and show how they apply to his or her case. The student should also mention how he or she plans to pay.
For example, whether they plan to pay the interest every month or pay it at the end of the forbearance period. They should also mention how much they can afford to pay during the forbearance period, such as half or less of the regular payment amount.
The student should clearly state why he or she cannot afford to make the regular payments on the loan. If the reason is financial difficulty, the student needs to supply documentation that he or she has lost a job or has been unable to work because of illness or injury.
Copies of medical documents, bank statements or proof of job loss may need to be included with the letter.
The letter should be addressed to the correct person. If the student does not know the name of the loan officer, he or she should call the lender and ask for the name of the correct person.
Below is a sample of a letter requesting discretionary forbearance. It is a formal business letter and should be sent by registered mail with a notification of delivery, or it can be included with any forms that need to be completed by a student who is requesting forbearance. Any documentation included with the letter should be copies and not original documents.
Sample forbearance letter for student loans
Name of Student
Address of Student
City, State, Zip Code
Name of Loan Officer
Name of Lending Institution
Address of Lending Institution
City, State, Zip Code
RE: Formal request for forbearance for student loan number NUMBER
Dear Name of Loan Officer:
This letter is a formal request for 12 months forbearance for my student loan. The regular payment is $250 per month, and I am requesting to pay one quarter of that amount. I have read your rules for granting forbearance, and believe my situation fits under financial difficulty.
My father was making the payments until he died last month. I will be able to continue making the regular payments as soon as I get a suitable job. Since I graduate with honors in three months on DATE, I hope to have a job as a biology teacher in September of this year.
I will be able to continue the regular payments by the end of the year on DATE. I understand the interest will accrue, and I plan to pay it at that time. I have included a copy of the death certificate of my father.
I hope to receive a positive response from you as soon as possible because I am not in a financial position to continue to make the payments for much longer. I can be reached at Phone Number or Email Address if you have any questions or need any more information.
Thank you for considering my request.
Signature of Student
Printed Name of Student
Enclosed: death certificate of father