Forbearance or no forbearance?

This post is coming in after my self-imposed Friday posting deadline because 1) I am studying for general physics and organic chemistry exams next week, and 2) I hate posting just to post, and I wasn’t sure I had anything about which to write until this evening…

This evening, I received an email from American Education Services (AES), the student loan servicer for Private Student Loan 3 (PSL3) and Private Student Loan 4 (PSL4). The email directed me to my message inbox where a decision about my forbearance request awaited me. Huh? Thinking it might be SPAM, I ignored the email link and logged into the website through my browser. Upon opening the message in my inbox, I was informed that my in-school forbearance request had been “approved.” I toggled over to the loan details page to see the following:

That’s right. I have been approved for an in-school forbearance on PSL4 until January of 2024. What?

So, how did this happen? I have no idea. I obviously did not make this request. I am also very confused as to what triggered it as I have been in-school previously (I completed a master’s degree and was enrolled for a second bachelor’s degree when I began completing medical school prerequisites three years ago) and an in-school forbearance was not automatically applied to my account. My financial situation was much tighter during both of those periods so I would have applied had I known it was an option.

I don’t know exactly what to do or if this really changes anything. While it will be a stretch, PSL4 is targeted for payoff this year. Given that interest would still be accruing, would there be any benefit is pausing payments on PSL4 and applying them to PSL3? It seems like the only benefit would be psychological in that it would allow me to be even more aggressive in targeting PSL3. However, it seems like a potential “cost” would be the interest accruing on a slightly larger PSL4 balance for the six or so months while I pay off PSL3.

Additionally, while PSL4 does continue to accrue interest during an in-school forbearance, my University Student Loans do not… Actively applying for an in-school forbearance on my University Student Loans would effectively lower my interest rate on those loans to 0%. While I could also forgo payments on those loans and apply that minimum payment to PSL3, a part of me thinks it might make more sense to continue making the minimum payment on those loans, allowing the 0% interest rate to stretch the minimum payment that much further.

Thoughts?

6 thoughts on “Forbearance or no forbearance?

  1. I would definitely apply for forbearance on the University Loans to get that 0% interest!

    And I’d personally take whatever I can get so if PSL4 is also offering a forbearance I would take it too even if interest still accrues.

    Not that I’m wishing you any bad luck but at worst it’s a nice safety cushion to not have to make minimum payments in case you need the money elsewhere.

    At best you can still make any extra payments if you so choose or you can focus everything on PSL3 and gain that snowball momentum of tackling one loan at a time.

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    • You’re correct about the in-school deferment on the University Student Loans. There is no downside. I will apply on Monday. And you’re also correct about the “you never know” situation. $245.40 is not an insignificant chunk each month…

      “…or you can focus everything on PSL3 and gain that snowball momentum of tackling one loan at a time.” DING, DING, DING. I didn’t even realize this is the option that is now available to me. I mean, PSL2 would still have its $93.30 payment due each month but yea…this would give me an opportunity to just really focus on one loan at a time.

      Ugh. I still feel conflicted because I like seeing ALL the balances get a bit smaller each month.

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  2. Applying for an in-school forbearance on the university loans seems like a good idea. But if interest will keep accruing on the private loan, I’d at least pay the interest. It’s so depressing to see loan amounts going up!

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    • You’re correct. After reading Avery’s comment, I realized there is no downside. Why would I not do that?

      “It’s so depressing to see loan amounts going up!” THIS! Thinking about my loan amount go up on PSL4 is why I didn’t want to defer the minimum payment to PSL3. But your solution to that is so tidy: make interest only payments. As seen above, the interest rate on PSL4 is 3.75% resulting in about $35.00 each month. Making interest only payments on this loan would free up $210.00.

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  3. I am late to this discussion, so I’m just going to say, I love the idea of taking the forbearance where you can, paying off just interest, and focusing everything of PSL 3!

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    • Never too late…it’s been a rough week at work but this is a good reminder to ask for the in-school forbearance on my University loans so they will be at a zero interest rate. Given the support for it, my plan for March 1st is just to make an interest payment on PSL4 and shift the minimum payment from PSL4 and the University Student Loans to PSL3.

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