- by Suze Orman
Repaying student loans Part 2
Ask for an extension if it's truly necessary. If you absolutley, positively can't handle any payments just yet, you must formally ask for your account to be granted a deferment or forbearance. I can't stress this enough: You mush ask for a delay; if you just ignore the loans you are going to be hit with costly penalty fees, and the worst-case scenario is that you end up in loan default. That will be disastrous for you credit rating.
You have two options for delaying payments; you must apply for both options. The general rule is to always apply for deferment first, and if that isn't granted, try for forbearance.
If you have yet to land a job, you may be eligible for deferment (for up to three years), though, depending on the type of loan you have, interest may continue to be applied to the loan balance.
Descretionary forbearance can be granted if you're ill or experiencing a financial hardship (layoff, illness impacting wage earner, etc.) or a military deployment. With this option your payments may be suspended or reduced for up to 12 months, though interest generally continues to be added to your loan balance.
To be continued with part 3....:-)