should be contacted immediately. They will work with you to help avoid any adverse consequences which could result in default. Options that are available to some borrowers unable to make scheduled payments are listed below.

Deferments

A deferment allows borrowers to temporarily postpone repayment of their student loans. During a deferment of Direct Subsidized Loans, principal payments are postponed and no interest is charged. However, on Direct Unsubsidized Loan deferments, principal payments are temporarily postponed, but interest is charged. The borrower has the choice to pay the interest accrued monthly or have it capitalized.

Reasons for Deferments

The following are conditions under which a deferment MAY be granted:

at least half-time enrollment at an eligible school,
enrollment in a graduate fellowship program approved by the U.S. Department of Education,
enrolled in an approved rehabilitation training program for individuals with disabilities,
conscientiously seeking but unable to find full-time employment (for up to three years),
experiencing economic hardship (for up to three years).

These deferments apply to all Direct Loans:

If at the time a Direct Loan is obtained, the student has an outstanding balance on a:
- Federal Stafford Loan,
- Guaranteed Student Loan,
- Federal Insured Student Loan,
- Federal Plus Loan, Federal Supplemental Loans for Students (SLS),
- Auxiliary Loans to Assist Students (ALAS),
- or Federal Consolidation Loan,

before July 1st 1993, a deferment on the Direct Loan is also possible if:

serving in the U.S. Armed Forces or in the Commissioned Corps of the Public Health Service (for up to three years),
serving as a full-time volunteer for the Peace Corps, ACTION programs such as VISTA, or and approved comparable organization (for up to three years),
while temporarily totally disabled according to the sworn affidavit of a qualified physician or unable to work because you must care for a spouse or dependent who is totally, temporarily disabled (for up to three years),
while serving in an internship or residency required to begin professional practice (for up to two years)
while serving in the National Oceanic and Atmospheric Administration Corps (for up to three years),
while teaching full time in a public or non-profit private elementary or secondary school in an area the U.S. Department of Education has determined to be a teacher shortage area,
if you are a mother of preschool-age children and are going to work at a salary no more than $1.00 above the minimum wage (for up to one year), or
for parental leave for each period during which you are pregnant, you are caring for your newborn child, or you are caring for your newly adopted child (for up to six months). You must be unemployed, must not be a student, and must apply within six months after you leave school or drop below half-time enrollment.

To receive a deferment, a student must apply for one through the Direct Loan Servicing Center or lender. There is a deferment form to fill out to request each type of deferment; the servicing center or lender will send the appropriate application when requested.

Forbearance

Forbearance is a temporary postponement or reduction of loan payments for a limited and specified period or an extension of the time a student has to repay his/her loans. You may qualify for forbearance if you are willing but unable to make loan payments due to poor health or other acceptable reasons, and you do not meet a deferment condition.

Reasons for Forbearance

The following are conditions under which forbearanceMAY be granted:

serving in a medical or dental internship or residency;
serving in a position under the National and Community Service Trust Act of 1993; or
being obligated to make payments on federal student loans that are equal to or greater than 20 percent of total monthly income.

In a period of forbearance, interest will be charged and, unless it is paid, it will be capitalized. This will increase the amount the student owes.

Cancellation

A discharge or cancellation releases you from all obligation to repay the loans. You can receive a discharge only with proof of:

total and permanent disability,
inability to complete a course of study because the school closes (under certain circumstances),
because your eligibility was falsely certified by the school,
bankruptcy (in rare cases),
death, or
due to a fault of the school

Loan Cancellation due to School Error

Some loans may not have to be repaid if you claim as a defense against repayment that the Eastern did something wrong or failed to do something we should have done. You may make such a claim as a defense against repayment only if what Eastern did or did not do could result in legal action being taken against the school under state law.

You could raise your defense during the following proceedings:

tax refund offset,
wage garnishment,
salary offset for federal employees,
or credit bureau reporting.

You may not avoid repaying your loans because you:

did not complete your program of study (for reasons other than school closure or false certification of loan eligibility,)
did not like the school or the program of study,
or did not obtain employment after completing the program of study.

Look through the glossary...

To move on to the next section, answer the following question correctly.

True or False ?

During a period in which a forbearance is granted, the borrower is free from all interest charges on subsidized loans until repayment begins again.

[ ] True	[ ] False

Please e-mail Financial Aid for further assistance.
East Wing, Student Services Bldg - (217) 581-3713

Last updated: October 27, 2003

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