Similar to when you can’t pay back your student loans, there are a number of available options when you’re having trouble paying down your student loans. However, if, after exploring all your options, there is still no way you can afford your payments, it may be time to explore the possibility of student loan forgiveness.
Follow this advice to determine if you are eligible to have your student debt forgiven.
There are a number of different loan assistance programs for federal student aid, and all of them have different requirements. Your options depend on the types of loans you acquired — such as Direct Loans, Perkins Loans, or FFEL loans.
There are also programs that may relieve you of some repayment responsibilities for your loans – including forgiveness, cancelation, and discharge. All come with different requirements, including disability, your school closing for business, certain public service work, military service, and more.
After researching your options, contact your lender. For Perkins loans, you must apply for forgiveness through the school that made the loan or contact the lender that the school went through. If you qualify, your lender can walk you through the application process.
Until you receive an approval or a rejection of your application for discharge, forgiveness, or cancelation of your loans, you need to continue to make your payments. Unless your loan is already in deferment or forbearance, your loan could go into default and/or accrue more interest. Moreover, your credit score will tank as a result.
Your lender can possibly grant you a forbearance while you await a decision – so, if you are concerned about making payments as you wait, make sure to ask about this option.
If your request for discharge, forgiveness, or cancelation is approved, you are no longer under the burden of debt. If, however, your application is rejected, there may not be much you can do. In most cases, other than false certification and forged signatures, your request cannot be appealed. You need to go back to your first step, and identify an option that is more appealing (income based repayment, forbearance, etc.) than your current situation.
Unless your loan is already in deferment or forbearance, you should be making payments if possible. Not making a payment can put your loan in default, at which time the government can take action against you to recur the loan balance. Plus, since your credit reports will then show negative marks, you may have trouble getting a credit card (or even buying a car or home) later.
Just because you meet the requirements for student loan forgiveness doesn’t mean you can immediately stop paying. You have to go through the formal process of applying, and you can only stop paying if/when your application is approved.
Declaring bankruptcy does not automatically let you off the hook for your student loans. When you file for Chapter 7 or Chapter 13 bankruptcy, you can have your loan discharged. However, you must prove to the bankruptcy court that repaying your loan would cause hardship on you or your dependents.
At this time, you could potentially have your loan discharged, but you cannot assume that this will happen. In many cases, student loan debt is not forgiven when filing for bankruptcy.
Unfortunately, because of the sheer number of student loan borrowers in financial trouble, a number of disreputable organizations and scammers have popped up to “help” borrowers make their loans or navigate student loan forgiveness.
Many student loan “debt-relief” companies charge large sums for services that aren’t helpful or that the borrower can easily accomplish without assistance. Also, some companies may try to offer you loan consolidation programs, which they conveniently service. While loan consolidation may be a viable option, it can also make you ineligible for loan forgiveness or payment restructuring options.
Be wary of any company making offers that sound too good to be true. Many of them are outright scams.
Seeking student loan forgiveness can be difficult — but it’s entirely possible nonetheless. You have to meet strict requirements and go through an application process. There are a number of qualifiers for different situations, however, and depending on the type of loan, different solutions you can pursue. The best way to start is to research your options and then contact your lender to see what actions you can take to make your debt more manageable.
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