In our final installment of this three part series, we look at our next to last common student loan myth. This one is tied to forbearance and deferment availability.
What you think happens. You have had trouble making payments so you called your servicer up. They gave you a General Forbearance for a year and now you don’t have to pay. That year is up so you call again and receive another year of forbearance. You want to pay your loans but as long as you can’t with this economy at least you can keep using forbearance time.
What actually happens. Forbearance and deferment time is a great tool available to use if you are in a bad situation. However it is meant as temporary and for things like the Unemployment and Economic Hardship Deferment along with the General or Student Loan Debt Burden Forbearance you only have three years of time to use (sometimes less if your loan is older than 7/1/93). Once you exhaust all this time you will no longer be able to use that specific forbearance or deferment.
Where there may be a morsel of truth to this. There are some examples such as an In-School Deferment that is unlimited. Also if you consolidate your loans it pays off your old loans and forms a new loan thus giving you new time on all your forbearance/deferment options.