How to Get Out of Paying for College Loans Due to Hardship
You don't have to pay your student loans until after your post-graduation grace period (typically six months) has expired, and you are considered less than a "half-time" student. If you must start to pay your loans but are having problems making the rent, let alone paying back your school, there are options whereby you can postpone making payments or lower your payments for a specified period of time.
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Request an economic hardship deferment. According to Campus Partners, which processes loan payments for colleges and universities, you must request and submit an application for hardship deferment either to the entity that represents your school or through your school directly. If approved, you don't have to pay your loan, and interest doesn't accrue, for six months. But you can only have your loans deferred for three years over the life of the loan, according to Campus Partners.
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Request an unemployment deferment. Like economic hardship deferments, you'll have to fill out an application and submit it to either your school or your school's loan service provider. The stipulations (six-month intervals, three-year maximum over the life of the loan) are the same as those for a hardship deferment, but the difference comes in the supporting evidence you must provide to be considered for this type of relief. You have to submit documents that show you are unemployed, or are working less than full time, which would be less than 30 hours a week for three months in a row.
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Request your loans be put in forbearance. If you can't qualify for any type of deferment, you may qualify to have payment on your loan postponed. Interest will continue to accrue during this forbearance process. You will have the option of either paying that interest during the forbearance period or after the forbearance period ends. Like deferment, the maximum time you can have a loan in forbearance over the life of the loan is three years. Unlike deferment, through this process, the loan can be renewed at 12-month intervals instead of six-month intervals.
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Change your payment plan. If you're having problems paying your loans under your current plan, under federal law you can change your repayment level, according to the U.S. Department of Education. This new payment plan may better suit your income and economic situation. To request that your plan be changed, contact your loan provider.
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Avoid defaulting at all costs. In some extremely rare cases, if you declare Chapter 7 or 13 bankruptcy you can wipe out your student loans due to economic hardship, according to Moran Law Group. Of course, such extreme measures are meant to wipe out other types of debt -- like credit card debt -- and not student loans. Unlike bankruptcy, however, which remains on your record for years, Westwood College reports that if you default -- essentially stop paying your loans and fail to seek other options -- you will be turned in to the creditors and it will forever stain your credit report.
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References
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