What Are Student Hardship Loans?

Student hardship loans can help you meet the financial obligations of paying debt when you are unable to do so according to your income. There is a lot of confusion over what a hardship forgiveness, deferral, forbearance and loan are. While they are all related, there are key differences among each.

Hardship Forgiveness

Hardship forgiveness is the hardest option to achieve, and it represents the total or partial cancellation of your student debt. This is only made if you meet very specific criteria. Forgiveness is most often considered when you are filing for bankruptcy or have become disabled. However, you may contact a lawyer to help you argue for a forgiveness if any of the following factors are true:

  • You cannot make your payments due to an event outside of your control, such as unemployment, disability or illness

  • The circumstance will continue for a long period of time

  • You have made a good faith effort to repay your loans prior to the hardship

Your lawyer will present this information as well as information on your income, living expenses and other factors to show you cannot reasonably continue to make payments and still support yourself.

Hardship Deferral

You may have the opportunity to defer your loan for a period of time if you are undergoing a personal financial hardship. Your loan amount will not be reduced in any way, and interest may still continue to accrue. This depends on the agreement you reach with your lender. During this period, however, no monthly payments will be due. You will have to show the circumstance is out of your control, and you will be able to commence paying in the future once the deferral is over.

Hardship Forbearance

A forbearance is often the easiest type of loan help you can get on your student loan. This is similar to a deferral, but monthly payments do not stop coming due and your interest will continue to grow. The main difference is the company will make no attempt to collect from you during this period, leading to a ceasing of enforcement of the loan. This is usually done in a very short-term manner, perhaps just letting a few months go before enforcing the loan again. If you have just been laid off and are starting a new job in 60 days, for example, a forbearance may permit you to skip a few payments for the time being as you have a gap in income. You will have to pay the lender back once the loan forbearance period is over.

Hardship Loan

A hardship loan may be any type of loan that helps you meet your current payments, A debt settlement loan gives you a lump sum to pay to your student lender in return for total loan forgiveness. A refinancing loan allows you to do the same thing, but you will not negotiate the total sum down as much; instead, you will simply benefit from a lower interest rate or lower monthly payments. Finally, consolidation options allow you to combine multiple loans into one, reducing your total payments and making the program easier on you.


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