Student Loan Forbearance
Today in this video, we’re going to talk about student loan forbearance, what it is, and when you should consider applying for a forbearance, check it out.
Hi, my name is Rhonda Burgess and I’m a real estate broker and mortgage underwriter here in Nashville, Tennessee, and my firm is Southern Living Realty Partners. Today I want to talk about student loan forbearance and what it is and when you should consider it. A lot of times I think we get student loan deferment and student loan forbearance mixed up because they are two different things. I just did a video talking about the student loan deferment for us federal student loan holders.
A deferment is where you are not making the payment, you are not making the payment. Maybe you have in school deferment. I know a lot of us are familiar with that. That means when you’re enrolled in school, you’re actively in school, the payment on your student loans is deferred until you get out of school. And normally it’s six months after you graduate. That’s a deferment. You have an automatic deferment from when you graduate. You have a six month deferment until you have to start making payments.
Those are deferments. What I’m talking about today is a forbearance. A forbearance is where you’re saying, you know what, I’m having trouble making these payments. For whatever reason, I’ve had a life event. I’m unemployed. I just had a baby. Things like this that are going on where you are unable to make your payments, you need a forbearance where you just need to have a period of time and you’re letting your servicer know, you’re letting your loan servicer know that you cannot make the payment and you want them to make an arrangement with you.
That’s a forbearance. That is not a deferment. There are automatic deferments, but then a forbearance. Normally nine times out of ten. You’ve got to apply for a forbearance before one will be issued to you.
Please consider subscribing to the channel and give this video a thumbs up. Some common reasons for forbearance, again, would be you lost your job, someone’s sick. You know, maybe your spouse has lost a job. Maybe your spouse is sick.
You’ve been laid off temporarily. Your hours have been cut, maybe because of covid or whatever the situation is. This is when you’re unable to make your payment or you’re unable to make your full payment. Then what you need to do is reach out to your loan servicer and let them know what’s up. Even if you’ve already let’s say you’ve missed the last two months payments because you’ve been laid off or your hours have been reduced or whatever.
And I mean, maybe you’re 60 days you’re running about 90 days late. Don’t wait any longer.
Call your loan servicer, whoever you are supposed to make their payment to call them. Don’t do this emailing stuff. You can do the email, but it’s so much more personal when you talk to someone on the phone. When you talk to people on the phone, they can feel you can feel each other. You can feel where someone is coming from. A lot of times the people that answer the phones at your credit cards, at your student loans, at your mortgage company, those are real people.
Those are real people. And they experience the same things that you experience. So pick up the phone, do not be afraid. Pick up the phone and call and say, hey, look, I’m I know I’ve missed my last two payments. I’m having trouble. Is there something we can do? Can you help me? Sometimes they’ll just take those payments and put them on the end of the loan. Sometimes they’ll just say, OK, fine, you know, for this six month, 12 month period, whatever, you’re not going to have to make a payment or your payment may be a third of what your normal payment is.
Can you pay twenty dollars a month. Yes. OK, cool. We’re going to make your payments, we’re going to make it $20 dollars. And for this period of this forbearance you will only make a $20 dollar payment and then when the forbearance period is up, you’ll go back to your regular payment. Or like I said, they may have it where you don’t make any payments at all. Even if you’ve fallen behind already, call your servicer and see if you can’t get into some type of forbearance because then they can go back and they can make that forbearance retroactive to when you first fell behind.
And so those payments may not be reported as late on your credit report. Your score may not take a hit because they’re going to include that in the forbearance period. Yes, it will 9 times out of 10, it will show up on your credit report as your student loans are in forbearance. But you would rather have a say in forbearance than you would have a late payment or your student loans being in default.
One good thing about a student loan forbearance is that you stop the late payments from being reported. You’re communicating with your lender. So they’re not going to keep just thinking you just ran out on these student loans. OK, that also going into a forbearance can also prevent you from having to do student loan rehabilitation. Rehabilitation is where you weren’t able to make payments for months. For months, they’re probably taking your income tax. They’re doing all kind of stuff.
They, you know, Sallie Mae calling you every day. You know what it is, OK. When you do a rehabilitation it’s where you’re saying. OK, I know I fell off the wagon before and I’m trying to get back on the wagon. I’m trying to get back in your good graces. So then they work out a repayment plan and you’ve got to make every payment on that repayment plan in order for them to put your loans back in good standing.
That’s when you have fallen into a bad situation and you have to rehab your loans. Use the forbearance, use it. Call them. There’s nothing wrong with being in forbearance. You’re communicating. You let them know I’m getting back up on my feet, I’m getting my stuff together, and I will be able to make these payments in the future. And that saves your credit report, that saves your credit score by you simply making a phone call and going into a student loan forbearance.
And one more thing, especially for my private student loan holders, you guys with the private student loans, you are not in a deferment right now.
I just said that in my previous video. You did not get an automatic deferment like us federal student loan holders did. Please make sure you are making your payments. If you are unable to make your payments, please call your servicer and get in. They do forbearance for federal loans. They do it for private loans. They do it for mortgages. They do it for everything. There’s no reason why. I know it’s rough right now. It really is. It is rough for a lot of people right now.
But please do what you can to preserve your credit because better days are going to come. If this is helping you or could help someone that you know, please consider subscribing to the channel and give the video a thumbs up so we can spread the love around here and so that more people will be shown the video by the YouTube algorithm.
Again, my name is Rhonda Burgess and I’m a real estate broker, mortgage underwriter here in Nashville, Tennessee. If you need help with finding a new home here, Nashville, I would be glad to help you.
Please download the HomeScout app from your App Store and use my code 0832. That will give you access to all the Nashville MLS listings and they are updated every 15 minutes. If you need to reach me, my phone number as always, is 615-554-0832. Again, please consider subscribing to the channel. Thank you and as always, have a blessed day.