A student loan payment can be deferred or cancelled altogether, did you know this? If you have been ill or have not been able to get a job, there are ways you can have them deferred or cancelled. What you cannot do is default on the payment.
Sometimes the situation is temporary and so you can apply for a postponement of payment or just to lower the amount you have to pay. The period when you are granted this relief is called deferment or forbearance. What is the difference between the two? The government will pay the interest on deferment whereas for forbearance, the interest will continue to accrue.
That is why you have to learn about the options before defaulting on the student loan payment. Otherwise, the ramifications are negative. Not only will defaulting damage your credit, but it will also increase your loan a lot because the collection fees are added to it. In some cases they can even garnish your paycheck and take your tax refund.
So what are the student loan payment options if you are not able to meet the monthly obligation? You can apply to postpone payment through forbearance and deferment or have it altogether eliminated through cancellation of the loan. You can also have the loan discharged through bankruptcy. And there are other options as well.
For now, let us see how to go about applying for deferment or forbearance. A deferment will allow you not to make a student loan payment for a definite period of time. This is usually granted when you are going back to school, or being unemployed or in financial difficulty.
You are qualified for a deferment if you have not defaulted your student loan payment or is under the grace period which means you are within six months from graduation. Another point that will help is if you have been granted a forbearance or a deferment before. How do you get this? Contact loan holder and request for the appropriate form.
The reasons for which you are granted a forbearance are unexpected personal problems, ill health, monthly payment is more than 20% of the income and inability to pay within the maximum term which is usually 10 years. To apply, contact the holder of the loan and explain the situation and they will provide you with a form to fill out. Usually, the forbearance is granted one year at a time.
Student loans can also be discharged through bankruptcy. You have to prove to the court the severe hardship you are undergoing based on your income and expenses and how long it will take to get out of the situation you are in. You have to show them to how hard you tried to pay your debt.
Now let us go to the best part which is how to cancel your student loan payment. As for other cancellations, there are conditions under which this can be done. They are listed below but tread carefully as some conditions are just for deferment or cancellation or for both.
If you are permanently disabled, you can cancel your loan. After your death, the one who is working on your last papers can also apply to cancel your debt. If you or your dependents and spouse get temporarily disabled, then you can apply for deferment for up to three years on loans made before July 1, 1993. You can also apply for deferment for loans made after June, 30 2009 if you are unemployed or undergoing economic hardship. The same is true if you are enrolled in a rehabilitation program. If you are teaching needy people or a member of a uniformed service, cancel or defer payments. If you are enrolled half time studying at an institution of learning, you can defer payment. If you are providing service other than teaching, to needy people or working as law enforcement person, you can cancel some older Perkins loans. You can also cancel your loan if you have been a victim of identity theft with the signature forged on loan application or attended a trade school that closed before you finished the program or officials falsely certified you will benefit from signing up. Doing community service or working as nurse or doctor during residency can qualify you to cancel or defer payments. Those who withdrew from school and did not get a refund and finished only 60% of the course can have their loan cancelled up to the refund amount along with the accompanying interest and fees. The Congress also added an additional condition that will allow relatives of eligible public servants or victims of the September 11 to cancel or defer loans.
There you have the information on how to cancel or defer your school loans. You may not be able to get all but getting rid of a portion will be a help. So call the loan holder or the Federal Student Office at 1-800-621-3115 or go to http://www.ed.gov/offices/OSFAP/DCS/index.html. Who knows, you may be able to cancel or defer your student loan payment.
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