Options When You Can't Repay Your Student Loans

By Danielle Wirsansky on November 7, 2016

For some people, college is the highest of the highs, the best times of their lives. College means independence, freedom, freethinking, and no worries beyond what they will wear to class the next day.

For others, college is less of a bright spot. To them, college represents, stress, exhaustion, debt, and student loans. Sometimes the debt can be overwhelming and there might come a time when you are at the end of your rope and you simply cannot pay back your student loans on time.

This can feel like the end of the world but there can be a light at the end of the tunnel if you only know to look for it. Read on to learn some options for when you cannot repay your student loans!

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Deferments

A deferment on your student loan can often be the best first option to try. What a deferment does is give you a specific amount of time to hold off on putting money towards your debt. There are different kinds of loans as well and some loans can give you other perks.

In many cases, it will also stop your interest from growing on the unpaid balance during the time that you are not paying it so that your debt does not grow larger because of it. Sounds great, right? However, not everyone’s loan allows that and not everyone is qualified for a deferment so you should check to see if you qualify before celebrating.

The factors that can affect the eligibility of your deferment are the kind of loan you took out and the institution providing it to you.

Cancellation

A cancellation also sounds great but can often be too good to be true. While again it does depend on what kind of loan you have and where you received it, you may be eligible for a cancellation. However, it often will not be the entire loan but only a portion of it.

In order to see if you are eligible for the loan cancellation process, you must contact the holder of your loan or the Department of Education’s Debt Collection Services Office where they will check to see if you meet the conditions of a cancellation.

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Conditions

The following conditions affect your eligibility for deferring and/or canceling your student loans. Options that are bolded and have further explanation are some of the conditions most likely to affect those with student loans:

•The borrower has died.

•The borrower is suffering from a permanent total disability.

•The borrower is suffering from a temporary total disability.

•The borrower is enrolled in a rehabilitation program for his or her disability.

The borrower is unemployed. In order to qualify this, you must be on unemployment and receiving those benefits and be able to prove that you are receiving them. You must also be able to show proof (copies of application, etc.) that you have been looking for a job. And not just any job but a job that will provide you with full-time work, at least 30 hours a week for at least a three month gig.

Economic hardship. You have to prove that you are suffering from economic hardship, so if you are dependent on public assistance (welfare, etc.) you are automatically eligible for a deferment. But if you are not getting public assistance then your wages will be looked into and then compared to the federal minimum wage as well as the federal poverty level. You will also have to provide proof of your income (through pay stubs, etc).

The borrower is currently enrolled in school. As long as you are in school in what is considered a half-time basis, you can put off paying your loans and getting a deferment at least until you are graduated and done with school.

•The borrower enters uniformed service.

•The borrower is teaching a needy population.

•The borrower is serving a needy population.

•The borrower is performing community service.

•The borrower is working in the health-care field. The borrower is working in law enforcement.

The borrower went to a trade school. The government is cracking down on many of these institutions, so if you attended one that was shut down before you were able to graduate with a degree (like ITT Tech) or were falsely told that taking out a loan and attending such a trade school would be beneficial to you, then you may even be eligible to have your school loans completely forgiven.

•The borrower was a victim of identity theft.

The borrower left school but never got a refundIf you took out a loan to attend school but for some reason were no longer able to attend and you either did not attend any classes or no more than 60 percent of your classes before withdrawing and never received a refund, you may be able to cancel your loan. But this will only be up to the amount that you should have received in the refund you never received.

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