If I’m out of General Forbearance, will consolidation help?

You have ran out of general forbearance.  What is your best option now?  If you are completely out of forbearance and no other option works (lower payments, other forbearances/deferments) the next best place to look very well might be to see if you have consolidated your loans yet or not.

When you consolidate your loans, this loan pays off your previous loans and starts a new loan.  As a result all your forbearance time is reset.  You can buy yourself an additional 3 years of General Forbearance by doing so.  Please be aware however that in doing so you are running the risk of interest capitalization that will likely increase your payment down the road.

However there is one loophole that was closed.  While your forbearance time will be reset, your deferment time will not be.  The reason for this is because the government pays interest on subsidized loans for deferments but on none of the balance for forbearances.  Because they do not want to continue to pay the interest of borrower’s loans for more than 3 years for each deferment you cannot reset your deferment time even if you consolidate.

While this is not an option I recommend, if all else fails it is an option you have.  But please remember always check your repayment options first along with your budget to make sure you are doing the best thing for you as in the long run a forbearance will often times make paying your loans a more daunting task than it even previously seemed.