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Are You Having Trouble with Your Student Loan Payments?


My colleague, Nancy Anderson, recently wrote an interesting post about college scholarships that even average students can qualify for. But what if  like most students, you had to take out student loans and are now having trouble with the payments? I recently received a question from someone who was struggling with his. There’s generally more attention paid to mortgages and credit cards but with student loan debt surpassing credit card debt, I expect this question will only become more common.

A student loan is a particularly dangerous debt to default on. While you might be able to walk away from credit card and even a home, the government can confiscate your tax refund, a portion of certain federal benefits like Social Security retirement and disability payments, and some of your wages up to 15% of your disposable income. Both the government and private lenders also have no time limit in which they can sue you unlike with other debts.

Protections in Default

If you’re in default, there are ways you might be able to fight back though. You can learn how to protect your tax refund and wages and to defend yourself against lawsuits at Student Loan Borrower Assistance. If you can’t resolve the problem on your own, you can also try contacting the Department of Education’s Ombudsman.

Loan Cancellation

In a very limited number of circumstances, you can get the loan completely or partially cancelled. In fact, the government will often even reimburse you for payments you’ve already made and help clean up your credit. Unfortunately, these limited circumstances include things like passing away or being permanently totally disabled. However, they also include providing services to needy populations, performing community service, working in health care or law enforcement, attending a trade school that closed before you graduated or falsely certified that you would benefit from the loan, or withdrawing from a school that doesn’t refund you for courses that you never completed. You can also cancel loans that were the result of a forged signature on the loan application. You can find out more about cancelling a loan by contacting the Education Department’s Ombudsman above.


If you’re not in default, you may be able to defer payments for a set period of time due to one of several conditions. These conditions include being temporarily totally disabled or having a spouse or a dependents that is,  being unemployed and looking for work, collecting public assistance or otherwise being able to show that you’re suffering severe economic hardship, being enrolled in school at least part-time, serving as a member of a uniformed service like the military or the Public Health Service, teaching low-income or disabled students, performing community service, or working in health care.  If you meet these conditions, you can request a deferment from the holder of your loan.


Another option is to ask for a forbearance, which means that your lender gives you permission to stop making payments for a set period of up to one year at a time but interest will continue to accrue during that time period. You may qualify for a forbearance on a federal student loan for a variety of reasons including poor health, unforeseen personal problems, inability to pay within the maximum repayment term, and if your monthly payments are more than 20% of your monthly income. In some situations, you may qualify even if you’re in default.

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