3 Benefits of Student Hardship Loans

There are a number of programs that can help borrowers in a compromised financial position get student hardship loans. These loans are aimed to help you pay off your student loans, and they are only available to a small group of people. It is important to note that a hardship loan is different than deferment, forbearance or forgiveness. In this case, you are taking another loan to assist you in paying off the debt you have already incurred to cover the cost of attending college.

The federal government may be willing to forgive debt or allow you to consolidate. If you have federal loans and would like an extension, use a deferment. Hardship loans are given through private institutions to resolve private debt; government debt is handled differently.

#1 - Creditors Stop Collecting

No one likes the stress of collections calls and notices, and paying off your immediate debt is one way to stop these actions against you. If you can come up with the cash to pay off the balance of the loans you are delinquent on, the creditors will stop calling. You may only be able to bring your loan up to date with your hardship loan, but even this action will save you from the hassles of collections. Most people find they are immediately relieved of a significant degree of stress once the initial payments are made and debts move out of collections.

#2 - Absolve a Portion of Debt

You may be able to get a settlement on your current student debt. A settlement simply means you offer a lump sum to the lender. This sum is less than the total you will owe on the loan, but it is more than the lender expected to gain from you as your loan moved into delinquency. Lenders are often reluctant to modify the loan this way. You will need to negotiate, and your new lender may offer assistance in negotiating this debt down. If you can arrange a settlement, the hardship lender will pay the settlement. You will then have a new loan that is not delinquent. Hopefully, the new loan will have a lower interest rate.

#3 - Monthly Payments are Easier

Whether you are settling, consolidating or simply renegotiating your terms, the point of a hardship loan is to get you through an immediate financial stress. For the time being, your obligation to pay large monthly debts may be removed, and you can slowly recover from your immediate financial crisis. You should note that hardship loans are not simply extended to persons who do not manage their money correctly. These loans are extended to people who made an effort to pay their loans for some time but can no longer do so because of an extenuating circumstance. If you simply mismanaged your debt, you may need to speak with a debt management agent.


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