What To Do When You Can't Afford Your Student Loans

Posted on: 12 December 2014

If you're having difficulty making monthly payments on federal student loans, don't panic. The government offers ways to alter your monthly payments, either by stopping them completely or reducing your monthly payments so you can afford to make them. However, it can be tricky figuring out what options you qualify for and what the difference is between them all. This guide will help to explain the difference between deferment and forbearance and will aid you in figuring out if you qualify for either.

Stop Or Reduce Your Payments

Believe it or not, options exist to stop your student loans completely for up to one year. After the year has elapsed, your case is reevaluated to determine whether you still qualify.

The best way to stop your payments is through loan deferment. If you qualify, you don't have to pay for an entire year and your loans stop accruing interest, so you don't end up with a higher amount of debt.

If you don't qualify for deferment, you can try applying for forbearance. Forbearance can stop or reduce your payments on your loans, but you'll continue to accrue interest. Even so, if you can't afford to make your payments, it's a far better alternative than letting your loans go to collections.

Deferment Qualifications

When you attend classes at a part-time or full-time level, your loans go into deferment automatically. However, if you're finished with school, it's a little more complicated. You may qualify for loan deferment if you possess any of these qualifications:

  • You're Unemployed - If you're trying to get a job and can't find one, your loan deferment will most likely be accepted.
  • You're Broke - If you're undergoing some kind of financial hardship due to an emergency, you may qualify for deferment until you're out of your hardship.
  • You're In The Military -  Military service in a time of war and up to 13 months after the conclusion of your service is an acceptable reason for loan deferment.

If you think you meet these requirements, contact your school's financial aid office or your loan company to discuss deferment.

Forbearance Qualifications

Qualifying for forbearance is simpler and a bit easier than getting a loan deferred. The terms of your forbearance are up to your loan provider: they can either stop or reduce your payments for up to 12 months, depending on your specific situation. There are two types of forbearance: discretionary and mandatory.

Discretionary forbearance can only be granted due to financial hardship or an extended illness. So if you're unemployed, struggling to make ends meet or you're dealing with a prolonged or extreme illness, you'll probably qualify for discretionary forbearance.

Mandatory forbearance has a few more ways to qualify: it can be granted if you're performing a medical or dental internship, becoming a part of the National Guard, or working as a teacher.

Thankfully, during times of hardship there are ways to change the payment terms of your loans with no repercussions. Your loan provider or the financial aid office at your school can provide more information and help you to fill out the necessary paperwork to apply. Even if you don't qualify for these options, or if your loans are from non-governmental sources, they can help you find the right person to talk to about student loan relief.