Paying Back Student Loans Can Cause Financial Hardship

US federal student loans are an item you usually can't put on a debt management plan. These are a priority because no matter what state you live in, if you default on student loans the federal government can garnish your wages. If you can't pay your student loans right now, though, you may be eligible for a deferment or forbearance.

Student Loan Deferments

A deferment lets you postpone your payments. Subsidized loans do not accrue interest during a deferment, but unsubsidized loans do accrue interest.

You may qualify for one of four deferments:

(1) At least half-time study at a postsecondary school.
(2) Study in an approved graduate fellowship program or in an approved rehabilitation-training program for the disabled.
(3) Unable to find full-time employment.
(4) Economic hardship.

If you have a Perkins or Stafford loan you may also qualify for additional deferments.

Student Loan Forbearance

If you are temporarily unable to make your payments, but are not eligible for a deferment, you may receive forbearance for a specified period. During forbearance the payments are postponed or reduced. You will be charged interest whether your loans are subsidized or unsubsidized.

A forbearance may be granted if you are:

(1) Unable to pay due to poor health or other unforeseen personal problems.
(2) Serving in a medical or dental internship or residency.
(3) Serving in a position under the National Community Service Trust Act of 1993.
(4) Obligated to make payments on certain federal student loans that are equal to or greater than 20 percent of your monthly gross income.

If you don't qualify for deferments or a forbearance, you may want to consolidate your student loans. There are several ways you can do that, including through the government, or through a local bank that may be willing to give you an equity loan on your home or a personal loan to pay off your student loan debt.

If you serve in the military you may also be eligible for repayment assistance. For more information, contact your recruiting officer.

Student Loan Sources

Federal Student Aid. "Postponing Repayment." United States Government.