What to do When Student Loan Debt Becomes Overwhelming

Student Loan Debt

If you have subsidized loans that do not accrue any interest during a deferment period, it might make good sense to opt for a special program that lets you temporarily stop making payments. If you will be able to re-start payments after a short time and if you are unable to make any size payment right now, student loan deferment may be a smart option.

It’s helpful to know that there are other ways to deal with large educational debt other than ceasing payment. Sometimes, it’s better to refinance the obligation or apply for one of the many forgiveness programs available. But if you make a complete assessment of your situation and decide that this is the way to go, here is what you need to know:

How to Know When You Need Help

If you are currently enrolled in school or the military, are receiving cancer treatment, are unemployed or are receiving any kind of financial assistance, you can probably qualify for a special deferment program. There are specific steps to take and you’ll need to continue to make regular payments until you receive official approval.

How It Works

Most of these programs allow you to make no payments for up to three years. Some programs for those attending school at least half-time, military service and cancer treatment, have longer time limits that depend on specific circumstances. But three years is the common amount of total time you’ll be able to stop making payments.

How to Get into a Program

To get into an official program, apply directly to whoever is servicing your account. They’ll be able to give you the form they use to determine whether you are eligible. If you meet the minimum requirements, the lender must grant it to you. The lender might require that you offer documented proof of your situation. It’s common, for example, for lenders to ask for written proof that you are unemployed, being treated or undergoing financial hardship. Be ready to include this proof with your application you make.


Some borrowers view stopping payment as a last resort, and only turn to this approach when their financial situation becomes unbearable. In fact, a temporary stoppage of payment does not eliminate any of the amount owed, it simply puts it off for another day. If you have a contract that does not allow you to stop paying interest as well as principal, then this type of program is probably is not the best way to go.

Instead, there are other options, like refinancing, making a settlement agreement, rehabilitating a default, or consolidating all your accounts into one. In many cases, even with settlement agreements, it’s possible to have lower monthly payments, better terms and even get a portion of the amount completely forgiven. Debt consolidation is one of the most common approaches for people who are having repayment trouble but who do not otherwise qualify for a program that lets them temporarily stop making payments. The main thing is to know where you stand and to know what all the options are. Deferment often makes sense, but everything depends on your particular financial situation.

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