Forbearance Options
Funding U offers a variety of forbearance options for students facing hardship and for those looking to continue their education after graduation. We have Forbearance options for students both in-school and our graduates who are in repayment. The specific forbearance options available to you will be fully detailed in your loan documents. Regardless of your situation, we always encourage our borrowers to stay in communication with us and our loan servicer Scratch. We are here to help!
2023-2024 School Year Loan Program Forbearance Options
Forbearance Options - In-School
In-School status Borrowers will have the opportunity to apply for a forbearance applied in ninety-day (90) day increments based on the following documentable and verifiable reasons:
● Any medical residency;
● Economic hardship;[1]
● Military deployment;
● Total permanent disability;
● Temporary hardship;[2]
● National Disaster
A $0 minimum monthly payment is required for periods of forbearance. Interest will continue to accrue and will be capitalized at the end of the forbearance where applicable and permitted by law. Borrowers will receive a quarterly interest notice with the option to pay any accrued interest.
A borrower must provide documentation of the continuance of the circumstance(s) for which the original forbearance was granted to qualify for additional ninety (90) day extensions of the original forbearance. The maximum aggregate amount of in-school forbearance time is fifty-one (51) months unless otherwise indicated in the Servicer-Initiated and Exceptional Forbearances section. Any forbearance automatically ends upon the conclusion of the student’s in-school period (6 months after graduation).
Forbearance Options - Repayment
Borrowers in Repayment will have the opportunity to apply for a forbearance applied in ninety-day (90) day increments based on the following documentable and verifiable reasons:
● Unemployment;[3]
● Pursuing further studies for a graduate degree at an eligible school;
● Any medical residency;
● Economic hardship;[4]
● Military deployment;
● Total permanent disability;
● Late School Notification;
● Temporary hardship;[5]
● National Disaster
A $0 minimum monthly payment is required for periods of forbearance. Interest will continue to accrue and will be capitalized at the end of the forbearance where applicable and permitted by law. Borrowers will receive a quarterly interest notice with the option to pay any accrued interest.
A borrower must provide documentation of the continuance of the circumstance(s) for which the original forbearance was granted to qualify for an additional ninety (90) day extension of the original forbearance. The maximum aggregate amount of forbearance time is twenty-four (24) months unless otherwise indicated in the Servicer-Initiated and Exceptional Forbearances section.
Periods of forbearance may extend the current maturity of the loan by the applicable duration.
Forbearance Requests
● A borrower may request a forbearance verbally or in writing with the Servicer. Documentation supporting the type of forbearance requested will be required by the Servicer.
● Servicer has the authority to apply the forbearance upon receipt of the appropriate documentation.
● Approval and/or denial of all forbearance requests will be communicated to the borrower by the Servicer.
Servicer-Initiated and Exceptional Forbearances
To comply with applicable law, Servicer will grant the following forbearances where applicable and without a request from the affected borrower:
Bankruptcy
● Upon notification to the Servicer of the borrower’s bankruptcy petition filing, Servicer will apply a bankruptcy forbearance as de facto recognition of the expected period of delinquency that will occur before filing the bankruptcy petition, and during the bankruptcy period.
● Increment Term: Unlimited
● Maximum Term: Unlimited
● Interest may be capitalized and borrower correspondence will cease.
Death
● Upon proper notification to the Servicer of the borrower’s death, all loan principal and interest will be forgiven.
Administrative
When determined necessary by the Servicer to facilitate processing of a required operational transaction , an administrative forbearance will be applied for any one of the following reasons:
● a need to research a borrower dispute,
● a need to collect and process supporting forbearance documentation
● a need to align due dates for borrowers with loans from multiple lenders with the same Servicer,
● a < 60 day delinquency prior to enrolling in automatic debit,
● a change in repayment schedules,
● a need to process a loan consolidation request, and/or
● any logistical, unforeseen delay in loan conversion to servicing.
● Increment Term: 60 days
● Maximum Term: Unlimited
● Interest may be capitalized, and notice provided.
Natural Disaster
● A borrower will be eligible in the event of a Natural Disaster as declared by the U.S. Department of Education, or at the Lender’s discretion.
● Increment Term: Three (3) months
● Maximum Term: Unlimited
● Interest may be capitalized and notice provided.
Temporary Total Disability
● A borrower will be eligible for an initial six (6) months prior to obtaining certification from a doctor of medicine or osteopathy regarding their potential total permanent disability. Borrower must initially self-certify under penalty of perjury their intent to obtain medical certification as aforementioned to receive the initial (6) months of this type of forbearance.
● Increment Term: Six (6) months
● Maximum Term: Twenty-four (24) months interest may be capitalized and notice provided.
Total Permanent Disability
● A borrower will be eligible upon obtaining certification from a doctor of medicine or osteopathy confirming their total and permanent disability.
● Increment Term: Six (6) months
● Maximum Term: sixty (60) months
● Interest may be capitalized and notice provided.
Late School Notification
● A borrower will be eligible during periods when the school has not reported status timely. For example, we may receive late notice from a school that a borrower is out of school. The Servicer may treat the loan as though it were in forbearance to cover any period of repayment and delinquency caused by the late notification of enrollment information.
● Increment Term: Unlimited
● Maximum Term: Unlimited
● Interest may be capitalized, and notice provided.
Active Military Duty
● A borrower will be eligible upon submitting documentation certifying active duty status.
● Increment Term: Unlimited
● Maximum Term: Unlimited
● Interest may be capitalized and notice provided.
Military Mobilization
● A borrower will be eligible upon submitting documentation certifying active military mobilization for an eligible location.
● Increment Term: Unlimited
● Maximum Term: Unlimited
● Interest may be capitalized and notice provided.
[1] A borrower is considered experiencing “economic hardship” if he or she is either (a) receiving verifiable payments under a federal or state public assistance program; (b) serving as a Peace Corps volunteer; (c) working full-time but with a monthly income less than or equal to the Federal Minimum Wage Rate (monthly amount, based on $7.25 an hour): $1,256.67; or working full-time but with a monthly income is equal to or less than 150% of the poverty guideline for the borrower’s family size and state of residence.
[2] A borrower is considered experiencing “temporary hardship” if he or she has requested postponement of his or her scheduled monthly payments because he or she is in the process of moving, has experienced a death in the family, is transitioning to a new job or is pursuing an entrepreneurship).
[3] A borrower is considered “unemployed” if he or she does not have a job, has actively looked for work in the prior four (4) weeks, and is currently available for work.
[4] A borrower is considered experiencing “economic hardship” if he or she is either (a) receiving verifiable payments under a federal or state public assistance program; (b) serving as a Peace Corps volunteer; (c) working full-time but with a monthly income less than or equal to the Federal Minimum Wage Rate (monthly amount, based on $7.25 an hour): $1,256.67; or working full-time but with a monthly income is equal to or less than 150% of the poverty guideline for the borrower’s family size and state of residence.
[5] A borrower is considered experiencing “temporary hardship” if he or she has requested postponement of his or her scheduled monthly payments because he or she is in the process of moving, has experienced a death in the family, is transitioning to a new job or is pursuing an entrepreneurship).
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