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Deferment, forbearence, capitalization, yada yada yada
April 24, 2015
11:02 am
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Nate
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HELP!

My wife recently lost her job and we are looking for options to lower/get rid of monthly payments while she’s trying to find work. The low hanging fruit would seem to be student loans…. Until I started reading what my “options” are. Holy crap there is a lot of info out there. Here is the 10k foot view of our situation:

One Private loan with 11.25% interest
Two Stafford loands with 6.8% interest

Is there a better road to go down deferment vs forbearence?

Thanks in advance for the advice and insight

April 24, 2015
10:30 pm
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Indiana
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Forum Posts: 334
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May 3, 2014
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deferments and forbearances both get you into dangerous territory… especially at 11.25% interest.

With the two stafford loans, I’d suggest looking into getting signed up for an income based repayment plan. Given that you wife is out of a job, her monthly payments should be $0 per month… though if you filed your taxes as a married couple, your income will also be considered.

With your private loan, your best bet would be to use her unemployment as an opportunity to get the interest rate lowered for a period of time (usually a year). For example, if she has Navient/Sallie Mae, she may qualify for the rate reduction program (more on that here: https://studentloansherpa.com/interest-rate-navient/ ). It wouldn’t make the payment disappear during her unemployment, but if you can swing the payments it would result in lower monthly payment AND a bigger dent in the principal balance.

Deferments and forbearances are bad because the interest just keeps growing and your student loan problem just gets worse and worse. They were created for temporary situations (such as a job loss), but should be a move of last resort. They are a better option than missing a payment, but not by much.

May 1, 2015
9:02 am
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Nate
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Aweseome. Thanks SO much for the insight and info!!

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