Everybody can stumble upon hard times and this can affect your finances. Whether you have lost your job or you suddenly have to pay costly medical bills, you may find yourself in difficulty when it comes to paying back your student loan.
But this does not mean that you are alone and left to figure it out by yourself. There are procedures in place to help you when you are in trouble. For example, there is student loan forbearance. Let’s take a look at what this is and the reasons why you should consider it.
What is Student Loan Forbearance?
Student loan forbearance is a process that is going to suspend your repayments for a period of time. It is a temporary measure that may also mean that you can lower your payments. Normally, people choose this as an option for up to 12 months to help them during periods of financial hardship. Student loan forbearance is different from deferment; in these trying times in which we find ourselves as a result of the Coronavirus pandemic, loan forbearance is something for which you should consider applying.
Reasons Why You Should Think About Forbearance
If you think you are going to have a hard time paying back your student loan as a result of restrictions put in place as a result of the COVID 19 pandemic, you should seriously consider forbearance. There are many reasons why this process can help you. Let’s take a look at four of them.
1 – It Allows You to Pay Other Expenses
If you already have debt that you need to handle, student loan forbearance lets you prioritize. The current lockdown, travel and work restrictions placed on the entire population are unprecedented. Some expenses are more pressing than others. Taking a break from your student loan by applying for a forbearance period will allow you to deal with maintaining your finance status quo.
2 – Get Back on Your Feet Fast
When you are a graduate, you have a lot to deal with. You are getting used to entering the working world and making that adjustment can be difficult. Student loan forbearance can help you get back on your feet. In the meantime, you can practice the debt snowflake method so that you can put more money to put towards your debts and gain control of your new situation. The corona virus restrictions put in place at federal and state level is unexpected disruption and is making life difficult for millions of citizens. Forbearance during corona period is one way of controlling your finances without damaging your credit score during this difficult time.
3 – Better Than Payday or Personal Loans
Not being able to pay back your student loans during a difficult financial period can be stressful. This means that graduates look for other ways to fund their debt. Often, they turn to payday or personal loans to do this. Doing so is not a good idea. Not only are you paying more in interest, it can also be financially destructive if you have trouble paying them back. Suddenly, you have more debt and if you default on a repayment, you can potentially end up owing many hundreds or thousands of dollars more than you originally borrowed. Student loan forbearance is a far better option and will not damage your credit score, unlike the damage defaulting on repayments would cause.
4 – It Does Not Hurt Your Credit Score
A major concern for a lot of people is that forbearance will affect their credit score. However, the good news is that this does not happen. While student loan forbearance will be noted on your credit report and companies will be able to see this, this is not going to hurt your score. This is the opposite if you have defaulted on your student loan. Missing payments always affects your credit. So, if you think this could happen, it is better to choose forbearance.