Going back to school in fall but can’t afford payment: Forbearance or IDR?

So here is the scenario.  You go into repayment in July.  You are going back to school in late August.  Because it can take up to a month for your enrollment to be updated you will owe payments for July, August, and September.  You can’t afford these payments but can afford a payment on an Income Plan.  Should you do this plan or a forbearance?

Honestly one of the first questions I ask someone when they ask about an income plan is if they are going back to school.  The reason is an interest subsidy.  When you are at least a half-time student at a DOE approved school the government pays your interest of subsidized loans.  When you are on a PAYE or IBR plan the same subsidy occurs for the first three years.

The important thing to note though is that this 3 years does not stop just because you are back in school.  So if you start a PAYE plan in July, 2014 then go back to school in August, your interest subsidy ends in July 2017 regardless of other factors.

This may cause you to waste a subsidy as opposed to if you began it say after you are out of school altogether.  However if you are going to school for only a semester this may not matter to you.  It is just one thing you must consider when deciding what to do during that bridge period between repayment and returning to school.