Unsubsidized Stafford Loans are not based on need, and the borrower is responsible for the interest. This program was merged with the unsubsidized Federal Stafford Loan program on July 1, 1994. An agreement to accept a temporary cessation of loan payments, smaller payments than were previously scheduled, or an extension of time for making payments. Forbearance may be given for circumstances not covered by deferment that adversely affect the borrower's ability to meet loan payment obligations, such as economic hardship. A lender or the government may take this action to force repayment of a loan that is in default.
Interest continues to be deferred on subsidized loans during the grace period.
To insure a loan and agree to pay the holder if the borrower default. Federal Stafford Loans are guaranteed by numerous state and national agencies on behalf of the federal government. Private loans are guaranteed by private guarantee agencies. A percentage of principal charged to the borrower by the guarantor to insure a lender against loss resulting from a borrower's failure to repay. The lender, institution, or agency that originated the loan and holds its legal title, or a lender or secondary market that purchased the loan from the original holder.